AMUL

  • Category: Business
  • Words: 874
  • Grade: 100

THE TASTE OF INDIA
The Origin
AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs.18.8 billion in 1997-98).

Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices. Of the genesis of a vast co-operative network. Of the triumph of indigenous technology. Of the marketing savvy of a farmers' organisation. And of a proven model for dairy development.

The Situation
The philosophy
The seeds of Gujarat Co-operative Milk Marketing Federation were sown in November 1973 with the simple intention of ensuring a fair return to the producers. The intention was to receive all the milk offered by them. The intention was to help Member Unions develop adequate production and processing facilities. The intention was to process all the milk received. The intention was to develop a product-mix that would promote sustained growth. The intention was to offer consumers quality products at fair prices, and to do so by achieving economies of scale and costs. The intention was to create and expand a milk grid to maximise the availability of liquid milk. The intention was that Milk Co-operatives would play an ever increasing role in the rural economy, providing gainful employment to large numbers of producers. The intention was to raise producer awareness that they could manage their own affairs through Co-operatives that they controlled. The intention was to create a structure, owned by farmers that would, with time, be the farmers' best friend. The intention was to establish a marketing and distribution system that would reach every corner of the country with your products. And the intention was that the highest levels of consumer confidence would be reposed in the brands called Amul and Sagar - extract of the speech given by Dr Kurien.

Members:        12 district cooperative milk producers' Union
No. of Producer Members:                        1.95 million
No. of Village Societies:                        10,183
Total Milk handling capacity:                6.0 million litres per day
Milk collection (Total-1997-98):                1.41 billion litres
Milk collection (Daily Ave.1997-98):        3.85 million litres

However this philosophy is coming in the way of its future growth. With profit making, consumer focused multinationals in the market place, this non profit organisation like strategy is eroding the company's dominant market standing. According to this philosophy, Amul concentrated on providing maximum returns to its suppliers and refrained from giving attractive margins to its distributors and retailers thereby creating resentment among the elements of the channel. Also the low profit margins forced the company to act low on the marketing and advertising front. Hence it has left open a number of significant weaknesses for the competitors to attack.

The market
A country where liquid milk accounts for 46% of the milk products consumption profile (with Indian dairy products such as butter, ghee, paneer, khoa & curd - accounts for the rest). The 90's was different, even for a business as stable as dairy farming, farmers have grown wise to corporate expectations, milk supply is in abundance, and rich foreign players like Kraft, Levers and Nestle are itching to either get in or beef up the operations.

Group Danone is already in the game with its Indian partner Britannia. The major competition faced by Amul is with Britannia Industries Ltd., Vijaya from Andhra Pradesh Development Co-operative Federation, Verka from Punjab, Kraft, and some new entrants like Le Bon a brand of Dabon - a joint venture between Dabur and Bongrain SA of France.

The lost opportunity
Amul had a significant lead-time over its competitors, which it failed to cash on. It still has the prime mover advantage and the marketing efforts since 1960's have made it a household brand in India. But lack of sustained marketing efforts, complacency towards distributors, lack of proactiveness to consumer needs and a strong consumer focus in its marketing mix strategy have failed to make it a consumer savvy company. The brand awareness is high but brand loyalty is not very strong.

Amul had enough opportunity to build a strong loyal customer base and create an entry barrier on the marketing front as well with very little consumer focused efforts. However now, the new entrants are gaining ground on the basis of this lost opportunity of Amul.

The change of guard
Dr Kurien is well known as an architect, who built Amul. It was due to his efforts and initiative that Amul has reached the position that it is currently in. However with news of Dr Kurien exiting the company are lending doubts to future prospects of the company. If Amul were to be a listed company, the stock prices would have crashed. But there is going to be no such direct repercussions on the company's image due to lack of media interest to create hype about the same. But this doesn't mean that the threat no longer exists. Hence it is going to be a challenge for the company and its communications strategy to keep the Amul heritage alive in this competitive era.
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