Written by Sabarni Paul, Member of SIGMA — The Business Club, NIT Trichy
Amul is the name that pops up immediately to every Indian whenever we hear Milk and its products. “Utterly Butterly Delicious” is what resonates in our brains and taste buds. Many of us have wondered what is the reason that Amul has always secured a special place in our heart as the “Taste of India”. If you have also been one of those who have been curious about the success of Amul, then this article is for you. Sit back and enjoy reading as we decode the Rise and Marketing Strategies of one of the most successful FMCG of the Nation.
A Little History :)
Amul was originally known as the Kaira District Cooperative Milk Producers Union Limited (KDCMPUL). Founded in 1946, in the state of Gujarat as the Indian Dairy Co-operative Society. The commencement of such a Co-operative due to the agitation amongst the milk vendors of the area of Kaira District. These vendors were paid unfair prices by the suppliers of the Mumbai region as the milk prices back then were arbitrarily determined from time to time.
The flustered vendors of Kaira approached Sardar Vallabhbhai Patel. He ended their agony by dissolving the already existing monopoly of Polson and created a new a new co-operative which was to directly supply to Bombay Milk Scheme.
Amul started the white revolution in the country and later on rose the country to the position of being the world’s largest producer of milk and milk products.
Strategy
Efficient Pricing & Diversified Portfolio
Amul has been catering to all the economic sections of the society without compromising on the quality of products. All the products manufactured, cover a huge segment of the market that is used daily like milk, ghee, ice-cream, cheese, butter are provided at rates lesser than that of their competitors. Amul has a diversified product portfolio and has been able to cater to the needs of all the segments from kids to old alike.
Supply Chain Management
The Amul model is a three-tier cooperative structure which consists of a dairy cooperative society at the village level that is affiliated with milk unions at the district level which in turn is federated to a milk federation at the state level. Milk is collected at the village dairy society, procured and processed at the district milk union and marketed at the state milk federation. The Amul model has helped India become the largest milk producer in the world.
The typical customers of Amul belong to the Section B and Section C segment wherein they are either middle class or lower class. Amul, in general, uses mass marketing and therefore it targets these 2 classes majorly.
Branding & Advertisement
The Amul girl — a cartoon figure, is used by the company to promote its brand. Amul generally uses the current news scenario with a bit of sarcasm and wit for their promotion which usually connects with the audience well.
Amul brand is worth $3.2 billion as per the 2013 brand equity report.
Amul started the tagline ‘Taste of India’ which reinforced its Indian connect when the advertisement appeared on the television. The ads taught Indians how butter/cheese could be used in our day to day life and that it’s not something that’s only a part of the English breakfast. Amul also came up with the famous Amul song ‘Sapne ho Gaye hai Sakar’ where it showed how Amul co-operative works and connects all the milk producers in Gujarat.
They have released a line of films that are only advertised on the digital mediums as it’s easy to tell stories in longer duration than with the time limitation as on televisions. Usually, the ads are emotional stories centred around typical families with funny twists most times.
‘Marketer of the year’ — IAAI, 2018
Competitional Analysis
Mother Dairy
This brand has seen to establish itself as a noteworthy occurrence in the market of Indian dairy.
The brand is quite popular in Delhi and NCR region. The main strength of this company is its existence in many sectors like milk and milk products which include ice cream, ghee, paneer, and other dairy products. Over the years since its production, this brand has established a high trust among customers.
The company sources a major part of its milk requirement from dairy cooperatives. The company processes milk which is controlled by automation. It makes use of microprocessor technology to integrate all functions of milk processing to make sure that the products are of high-quality.
It produces roughly 3.2 million liters of milk daily. The customers are satisfied with their products and the company mainly focuses on the sentiments and demands of Indian customers. Due to their vast experience in this field and their quality of dairy products, Mother Dairy is considered one of the top Amul competitors.
Amul is a bit more dynamic, has a better product mix, and has better brand recognition with all the marketing it does. Also has better sales.
Dinshaws
Dinshaws is a popular brand of ice cream that spans across India. Their focus was on the quality of ice creams thereby innovating new flavors which were truly wonderful.
The success in the production of ice cream gave rise to expand its business to several dairy products. From the fine range of ice creams to great flavors like Vanilla and Chocolate and also using a range of other ingredients, this brand has great ice creams for all. Due to their great quality and taste, Dinshaws is considered as a top Amul competitor.
The company’s continuous efforts for innovation and dedication gave roots to new flavors with huge market dominance throughout India
Amul still manages to be at the top because of its excellence in all the dairy sectors and not only ice- cream.
Gowardhan
Gowardhan brand is of the top brands of India for dairy-based products. This brand gave lots of delicious dairy products after this brand was founded. This brand is presently one of the biggest industries that procure fresh milk from more than 1.25 lakh farmers. The operational quantity of this brand is about 1.2 million liters per day. This brand is fully capable of producing a wide range of dairy products with the help of various kinds of machinery. Due to its location, it sells cheese (in form of mozzarella ) to most junk food giants in Mumbai and Gujarat. It is also the largest producer f cheese in the country.
Amul has a better reach in terms of household and is a more popular name among the masses.
SWOT Analysis
Strengths
A very high market share in ice cream — Amul has the top market share in the ice cream segment which further helps it push other products into the market.
Remarkable advertisement — Amul is a beloved brand over the years and the contribution of Amul girl and her outdoor ads should specifically be mentioned here.
Excellent quality management — Amul hardly has any quality complaints over the years.
Strong distribution network — This is one company that is strong in urban as well as rural distribution. Amul’s presence even in small towns and villages is equally strong.
Good product portfolio — Amul had a deep product portfolio when compared to any FMCG company. It has a much different variety of milk-based food items like cheese, butter, milk, buttermilk, lassi, and many others. In ice creams too, Amul has a large variety of flavours.
Strong Supply chain — Vendors love Amul and Amul is known for the white revolution in India.
Rural presence — Strong rural presence of Amul is its plus point. It is mentioned here separately because this rural presence gives Amul a strong competitive advantage.
Weaknesses
Cost of Operations — Amul’s operation is huge. And so is the cost. Plus the sector is such that maintaining margins becomes difficult day by day. Thus, to face international players, Amul needs to maintain the operations, in the same manner, it is carrying out today. It is not a weakness but rather a constant challenge for Amul. In fact, during summers, the brand faces a severe shortage of supply.
Chocolates — Amuls expansion to chocolate has failed and hardly any product of Amul chocolates is selling in the market. Amul needs further products to expand its product line and increase its bottom-line.
Opportunities
Export — Amul can export its product to other countries thereby increasing its turnover and margins exponentially.
Concentrate more on the chocolate market — Amul has a no advertisement policy which creates a problem for its foray into additional products. Amul should in fact have separate SBU’s and concentrate more on increasing its product line through chocolates or other such products.
Threats
Increasing competition in the Ice cream segment — Many players, local and international, are entering the ice cream market thereby taking away a share of wallet from Amul. Kwality walls, Naturals, London dairy, Havmor, Arun ice cream, Vadilal, Ramani, are some of the few brands who are directly in competition with Amul.
Strategies during COVID-19
Communication to stay in touch
Amidst the COVID related lockdown, Amul has been one of the more visible brands. They
unleashed a campaign consisting of ads under the ‘Amul Classics’ tag which were a series of old advertisements. This was interspersed with the new ad-clips and new products. This ensured that the audience across the age spectrum was engaged. The older group connected with the classic ads through sheer nostalgia and the younger lot connected with the new slick ads.
Audience Engagement
The Amul girl has been weaving her own magic during these days, appreciating working women who were Working from Home, mourning the loss of celebrities, reflecting the national anti- China sentiment in the wake of the Galvan valley standoff and so much more. However, what takes the cake (literally) is the hugely successful Amul FaceBook live program #SimpleHomemadeRecipes. This program which was initiated during the lockdown goes live for
4 times a day. They invite chefs from popular restaurants, hotels, Bakeries, catering institutions, and others to showcase their craft. The chefs use a wide range of Amul products to create Simple Homemade Recipes from the convenience of their home or hotel kitchens. This is probably one of the best Digital Engagement campaigns I have witnessed and propels the brand several notches up.
Demonstrate Compassion
During the lockdown, when other private milk companies stopped procuring from farmers, milk unions associated with Amul procured an extra 35 lakh liters of milk per day. This, in turn, helped the farmers and of course bumped up production for Amul. Such progressive measures are not just good for business, but also good for trust-building amongst consumers and the community as a whole.
Innovate to stay ahead of the game
Constant innovation is one of the qualities of a dominant brand. Stay relevant and contemporary is the mantra. Amul has a product range of over 300 products and if that was not enough, they have launched a few products in the last few weeks. Amul launched the Ginger and Tulsi variants of flavored milk in cans to add to the Haldi variant. This was meant to boost immunity and help in fighting COVID. Recently Amul has also launched Panchamrit (a blend of honey, sugar, curd, milk, and ghee) for the temple going devotee as hygiene becomes pivotal amidst the pandemic. To put this in perspective — launching a new product in the food category is not easy and to do that with the restrictions of lockdown bearing upon them — extremely creditable.
Conclusion
Amul generated a revenue of 5.4billion USD in 2019–2020.The brand has encouraged and enabled farmers/vendors to be entrepreneurs and earn their living. The whole process is designed so that there is no exploitation. The brand has proved that it is not just a product but a movement that represents the economic freedom of farmers.
It transformed India from a milk deficient nation into the world’s largest milk producer, achieved not merely by mass production, but by production by the masses.
