AMUL –an short overview

Type Cooperative society

Industry Dairy/fast-moving consumer good (FMCG)
Founded 1946; 73 years ago
Founder Tribhuvandas Patel
Headquarters Anand, Gujarat, India
Area served Worldwide
Key people Rupinder Singh Sodhi (Managing Director)
Revenue ₹38,000 crore (US$5.5 billion) (2018-19)
Number of employees 752 (Marketing Arm)
3.6 million (Milk producing members)
Amul is an Indian cooperative dairy company, based at Anand in the state of Gujarat

Formed in 1956, it is a cooperative brand managed by a cooperative body, the Gujarat Co-
operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6
million milk producers in gujrat

The name Amul derived from sanskrit word amulya which means priceless

Amul spurred India's White Revolution, which made the country the world's largest producer
of milk and milk products.

Amul was spearheaded by Tribhuvandas Patel under the guidance of Sardar Vallabhbhai
Patel. As a result, Kaira District Milk Union Limited was born in 1946. Tribhuvandas became
the founding chairman of the organization and led it until his death. He hired Dr. Verghese
Kurien in 1949. He convinced Dr. Kurien to stay and help with the mission.

Kurien, founder-chairman of the GCMMF for more than 30 years (1973–2006), is credited/
with the success of Amul's marketing .Amul has ventured into markets overseas

Company Profile
Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest food
product marketing organisation with annual turnover (2011-12) US$ 2.5 billion. Its daily milk
procurement is approx. 13 million lit (peak period) per day from 16,117 village milk
cooperative societies, 17 member unions covering 24 districts, and 3.18 million milk
producer members.

It is the Apex organisation of the Dairy Cooperatives of Gujarat, popularly known

as 'AMUL', which aims to provide remunerative returns to the farmers and also serve the
interest of consumers by providing quality products which are good value for money. Its
success has not only been emulated in India but serves as a model for rest of the World. It is
the exclusive marketing organisation of 'Amul' and 'Sagar' branded products. It operates
through 47 Sales Offices and has a dealer network of 5000 dealers and 10 lakh retailers, one
of the largest such networks in India. Its product range comprises milk, milk powder, health
beverages, ghee, butter, cheese, Pizza cheese, Ice-cream, Paneer, chocolates, and
traditional Indian sweets, etc

GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading
House" status. Many of our products are available in USA, Gulf Countries, Singapore, The
Philippines, Japan, China and Australia. GCMMF has received the APEDA Award from
Government of India for Excellence in Dairy Product Exports for the last 13 years. For the
year 2009-10, GCMMF has been awarded "Golden Trophy' for its outstanding export
performance and contribution in dairy products sector by APEDA.

For its consistent adherence to quality, customer focus and dependability, GCMMF has
received numerous awards and accolades over the years. It received the Rajiv Gandhi
National Quality Award in1999 in Best of All Category. In 2002 GCMMF bagged India's
Most Respected Company Award instituted by Business World. In 2003, it was awarded the
The IMC Ramakrishna Bajaj National Quality Award - 2003 for adopting noteworthy quality
management practices for logistics and procurement. GCMMF is the first and only Indian
organisation to win topmost International Dairy Federation Marketing Award for probiotic
ice cream launch in 2007.

The Amul brand is not only a product, but also a movement. It is in one way, the
representation of the economic freedom of farmers. It has given farmers the courage to
dream. To hope. To live.

Besides India, Amul has entered overseas markets such

as Mauritius, UAE, USA, Oman, Bangladesh, Australia, China, Singapore, Hong
Kong and a few South African countries. Its bid to enter Japanese market in 1994 did
not succeed, but it plans to venture again.

Milestones of GCMMF:

 2.8 million milk producer member families

 13,759 village societies
 13 District Unions
 8.5 million litres of milk procured per day
 Rs. 150 million disbursed in cash daily
 GCMMF is the largest cooperative business of small producers with an annual
turnover of Rs. 53 billion
 The Govt. of India has honoured Amul with the “Best of all categories Rajiv Gandhi
National Quality Award”.
 Largest milk handling capacity in Asia
 Largest Cold Chain Network
 48 Sales offices, 3000 Wholesale Distributors, 5 lakh retail outlets
  Export to 37 countries worth Rs. 150 crores
 Winner of APEDA(The Agricultural and Processed Food products Export
Development Authority) award for nine consecutive years

Total turnover of amul

Overview of GCMMF

Years of establishment 1973

members 18 district cooperative milk producer unit
No of the producer 3.6 million
No of the village's societies 18554
Total milk holding capacity 35 million
Milk collection 23 million
Sales turnover Rs33150crore/ ($4.8 Billion)
Countries where Amul exports
History of amul
Amul cooperative registered on 19 December 1946 as a response to the exploitation of marginal
milk producers by traders or agents of the only existing dairy, the Polson dairy, in the small city
distances to deliver milk, often went sour in summer, to Polson. The prices of milk were arbitrarily
determined. The government had given monopoly rights to Polson to collect milk from Kiara and
supply it to a Mumbai city.

Angered by the unfair trade practices, the farmers of Kiara approached Sardar Vallabhbhai Patel
under the leadership of local farmer leader Tribhuvandas K. Patel. He advised them to form a
cooperative (Kiara District Co-operative Milk Producers' Union) and supply milk directly to the
Bombay Milk Scheme instead of Polson (who did the same but gave them low prices). He sent
Morarji Desai to organise the farmers. In 1946, the milk farmers of the area went on a strike which led
to the setting up of the cooperative to collect and process milk .Milk collection was decentralized, as
most producers were marginal farmers who could deliver, at most, 1–2 litres of milk per day.
Cooperatives were formed for each village, too.By June 1948, the KDCMPUL had started
pasteurizing milk for the 'Bombay Milk Scheme'. Under the selfless leadership of Tribhuvandas Patel,
in 1973, Amul celebrated its 25th Anniversary with Morarji Desai, Maniben Patel and Verghese
Kurien.

The cooperative was further developed and managed by Dr. Verghese Kurien with H.M. Dalaya.
Dalaya's innovation of making skim milk powder from buffalo milk (for the first time in the world)
and a little later, with Kurien's help, making it on a commercial scale,[11] led to the first modern dairy
of the cooperative at Anand, which would compete against established players in the market. Kurien's
brother-in-law K.M. Philip sensitized Kurien to the needs of attending to the finer points of
marketing, including the creation and popularization of a brand.

The trio's (T. K. Patel, Kurien and Dalaya's) success at the cooperative's dairy soon spread to Anand's
neighbourhood in Gujarat. Within a short span, five unions in other districts – Mehsana, Banaskantha,
Baroda, Sabarkantha and Surat – were set up, following the approach sometimes described as the
Anand pattern.[8]

In 1970, it spearheaded the White Revolution of India. To combine forces and expand the
market while saving on advertising and avoid competing against each other, the Gujarat Co-
operative Milk Marketing Federation Ltd., an apex marketing body of these district
cooperatives, was set up in 1973. The Kaira Union, which had the brand name Amul with it
since 1955, transferred it to GCMMF.

In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.

Technological developments at Amul have subsequently spread to other parts of India.

The GCMMF is the largest food products marketing organisation of India. It is the apex organisation
of the dairy cooperatives of Gujarat. It is the exclusive marketing organisation for products under the
brand name of Amul and Sagar. Over the last five and a half decades, dairy cooperatives in Gujarat
have created an economic network that links more than 3.1 million village milk products with
millions of consumers in India.

On September 30, 2018, Prime Minister Narendra Modi inaugurated Amul's chocolate plant in Mogar,
Anand near their headquarters.
Amul range of products
AMUL defending its turf has changed retail environment, striked out on its own, with AMUL Outlets
or parlours to deliver consumers total brand experience. Launched in 2002, there are now 400 AMUL
parlours across the country, which contributed 3% to the brand’s total turnover last
year. AMUL parlours are today present on campuses of the Infosys, Wipro, IIM-A, IIT-B, Temples,
Metro rail and railway stations in Gujarat.
AMUL is the largest milk brand in Asia, marketing more than 30 different brands of dairy products
like cheese, ice-cream, condensed milk, ready-to-eat pizza, beverages etc. AMUL Kool and Kool Café
are doing well. AMUL has done well defending itself against names like Mahananda, Vijay, Milma
and other co-operative milk brands and also against FMCG and F&B brands like Britannia, Nestle and
Mother Dairy.
AMUL has largest chunk of market share of mare than 86 % . AMUL has introduced a number of
diverse range of varied products like cooking butter, low fat butter etc along its main product. Hence
covering all the segments in which a competitor can enter, thus creating strong barriers and in turn
playing offence to defend its market position
AMUL ice creams has 24.75 % market share in caparison to Mother Dairy share of 8.66% & the
market leader HUL- kwality walls share of 28.22%. AMUL is constantly engaged in deriving its
counter strategy to grow its market share. AMUL has offered Pro-biotic Ice-creams for health
concious individuals. This can be a promising product to keep family healthy and strong. The product
was launched with this in view.
AMUL chocolate market share is merely 10 % compared with 70 %share of the market leader,
Cadbury. AMUL is reworking its strategy in the chocolate category to push its chocolate product
sales. AMUL's strategy is to identify the market gaps and fill them suitabely.

Industry Analysis
Porter’s five forces for dairy and processed food industry in India

Threat of Entry (high)

 Capital Requirements (low)

 Economies of Scale (low)
 Absolute Cost Advantages (high)
 Product Differentiation (high)
 Access to Channels of Distribution (low)
 Governmental and Legal Barriers (high)
  Retaliation (high)
Industry Rivalry (high)

 Concentration (high)
 Diversity of competitors (low)
 Product differentiation (high)
 Excess capacity and exit barriers (moderate)
 Cost conditions (high)

Bargaining power of buyers (high)

Due to large number of options and substitute products present from competitors, the buyers
have very high bargaining power. Buyer switching cost is minimal and availability of
information makes the buyers all the more powerful.

Bargaining power of suppliers (low)

In food processing and dairy industry, the huge number of available suppliers makes it easier
for the companies to negotiate with them. Threat of backward integration is also present.

Threat of substitutes (high)

Pressure from Substitutes Emerges Mainly From Two Factors

 Switching costs for customers to the substitute (low)

 Buyer willingness to search out for substitutes (very high)
Overall it’s a highly competitive industry having very high effect of all the Porter’s forces. So
it’s not an attractive industry.

Value Chain

Customer – Large customer population consisting of households and businesses of various

sizes.

Suppliers – 2.12 million farmers and milk producers, more than 10,000 village level milk
collection
centres.

Competitors – Competition from organised as well as unorganised sectors. ITC, HUL, Nestle,
Brittania etc are competing in the organised sector with Amul whereas
unorganised
sector gives a tough competition in the form of milkmen and delivery boys
etc

Complementors – Hotel, catering houses and corporations.

Industry driving forces of dairy and processed food industry

 Abundant availability of raw material

India has varied agro climatic conditions; it has a wide-ranging and large raw material base
suitable for food-processing industries.
  Demographic trends

The food-processing industry has a bright future due to demographic environment in India,
which is a key positive. Rising income levels leading to large customer base India with its
population of more than 1 billion accounts for close to 17% of the global population. It is one
of the most attractive consumer markets in the world with the increase in income levels
across the population segments. The increase in income levels and higher tendency to spend
provides great opportunities for companies across various sectors

 Relatively young population

India has a relatively young population with close to 55% of population in the age group of
20- 59 years. This group is also high in consumption and therefore, this trend is expected to
provide a further boost to the growth of consumption in India.
Key success factors for companies involved in food processing in India:

 Development of effective distribution network and supply chain

 Various range of product offerings, which is customized to meet local market
requirements
 Superior processing technology to compete with other players in the market
 Brand building and marketing to gain market share; increasing penetration in
domestic market;
 Competitive pricing

Core competency of Amul

 The 3 tier revolutionary Amul model which has changed lives of millions of milk
producers across villages and improved their lives is the biggest core competency of
Amul when compared with other companies in the market. It is a model which no
company can replicate and boast of in the dairy industry.
  Unmatched supply chain network in the entire country leading to optimum product
reach even to the remotest village in India

SWOT Analysis of Amul

Strengths
1. Huge brand name and trust factor associated with the company. The company is having
Indian origin thus creating feeling of oneness in the mind of the customers.

2. It manufactures milk, milk products, sweets and processed food which is purely vegetarian
thus providing quality confidence in the minds of the customers.

3. It aims at rural segment, which covers a large area of loyal customers, which other
companies had failed to do.

4. People are quite confident for the quality products provided by Amul.

Weaknesses
1. Lack of investment as compared to other MNEs
2. Poor product replacement policy

Opportunities
1. There is a lot of potential for growth and development as huge population stay in rural
market where other companies are not targeting.

2. The chocolate market is at growth stage with very less competition so by introducing new
brand and intensive advertising there can be a very good scope in future.

Threats
1. The major threat is from other companies who hold the majority share of consumers in
Indian market i.e. Cadburys and Nestle.

2. There exists no brand loyalty in the chocolate market and consumers frequently shift their
brands.

BCG Matrix of Amul

Amul Pro
Challanges faced by SBU (IN AMUL)
Food-processing industry and the food processing business unit (SBU) in Amul is facing
constraints like non-availability of adequate infrastructural facilities, lack of adequate quality
control & testing infrastructure, inefficient supply chain, seasonality of raw material, high
inventory carrying cost, high taxation, high packaging cost, affordability and cultural
preference of fresh food.
Unprocessed foods are prone to spoilage by biochemical processes, microbial attack and
infestation. Good processing techniques, packaging, transportation and storage can play an
important role in reducing spoilage and extending shelf life. The challenge is to retain the
nutritional value, aroma, flavour and texture of foods, and presenting them in near natural
form with added conveniences. Processed foods need to be offered to the consumer in
hygienic and attractive packaging, and at low incremental costs.
Major Challenges are:

 Consumer education on nutritional facts of processed foods

 Low price-elasticity for processed food products
 Need for the distribution network and cold chain
 Backward-forward integration from a farm to consumers
 Development of marketing channels
 Development of linkages between industry, government
 Taxation line with other nation
News articles related to amul
Amul clocks 13% rise in turnover
at Rs 33,150 cr in FY'19
GCMMF has registered a provisional turnover of Rs 33,150 crore for
2018-19. The sales turnover achieved by Amul Federation is 13 per
cent higher than the previous financial year, the company said in a
statement.

GCMMF, which markets dairy products under Amul brand, Monday reported 13
per cent increase in turnover at Rs 33,150 crore during the just ended financial year
driven by strong growth in volume. Gujarat Co-operative Milk Marketing
Federation (GCMMF) had posted a turnover of Rs 29,225 crore in 2017-18.

GCMMF has registered a provisional turnover of Rs 33,150 crore for 2018-19. The
sales turnover achieved by Amul Federation is 13 per cent higher than the previous
financial year, the company said in a statement.

Amul Federation has been achieving a compound annual growth rate (CAGR) of
more than 17.5 per cent for the last nine years because of higher milk procurement,
continuous expansion in terms of adding new markets, launching of new products
and adding new milk processing capacities across the country.

The provisional unduplicated group turnover of Amul Federation and its 18

member unions has crossed Rs 45,000 crore which is also 13 per cent higher than
last year.

The 18 member unions of Amul Federation with a farmer-member strength of

more than 36 lakh, across 18,700 villages of Gujarat, are procuring on an average
230 lakh litres of milk per day which is 10 per cent higher than last year.

Amul Federation Chairman Ramsinh P Parmar said, "based on estimated growth in

market demand for Amul products and our future marketing efforts, we anticipate
at least 20 per cent CAGR growth in the business of Amul Federation during the
next five years."

Jethabhai Bharwad, Vice Chairman, Amul Federation added that member unions
of Amul plan to enhance its milk processing capacity from the current level of 350
lakh litres per day to 380–400 lakh litres per day in the next two years.

R S Sodhi, MD, Amul, said, "we have achieved volume sales growth in all product
categories. Pouch milk, which is the highest turnover product, has shown good
growth in all most all the market"

He informed that in all the product categories, it has achieved double digit growth
in volume.

2)

Dairy Product Market

Insights, Dynamics and Top
Manufacturers 2019-2025:
Amul, Nestle, Royal Friesl,
Danone, Unilever
Published: Dec 4, 2019 1:13 a.m. ET

Dec 04, 2019 (Market Insight Reports via COMTEX) -- Comprehensive

enlightenment in the Global Dairy Product Market, addressing growing demand,
production volume, sales revenue, and growth prospects.

The Global Dairy Product Market research report of Services and Software
industry offers an in-depth evaluation of each crucial aspect of the worldwide
Dairy Product industry that relates to market size, share, revenue, demand,
sales volume, and development in the market. The report analyzes the Dairy
Product market over the values, historical pricing structure, and volume
trends that make it easy to predict growth momentum and precisely estimate
forthcoming opportunities in the Dairy Product industry.
Top Companies Are Covered In Dairy Product Market Report:

Amul, Agra Industrier, Dairy Farmers, Kraft Foods, Fonterra, Dairy Farmers of
America, Arla Foods, Meiji Dairies, Nestle, Royal Fries, Campina, Sanncor,
Megmilk Snow, Dean Foods, Parmalat, Danone, Unilever

Dairy Product Market segment by Type, the product can be split into:

Milk
Butter
Cheese
Casein
Ice Cream
Lactose
Yoghurt