Business Economics

Case Study on

Prepared by: Maitreyee B. Shukla MBA Tech ± IT 122

Business Economics: Case Study Amul

122

Page 1

Contents: Introduction Origin Where does Amul stand in the global market? SWOT Analysis 3 4 5 6 6 y Strengths y Weaknesses Opportunities Threats 8 9 10 11 11 y y My view Bibliography Business Economics: Case Study Amul 122 Page 2 .

Business Economics: Case Study Amul 122 Page 3 .8 million producer members with milk collection average of 10.8 million milk producers in Gujarat. China. from the Sanskrit ³Amoolya´ (meaning ³precious´) was suggested by a quality control expert in Anand. The White Revolution ushered an era of plenty from a measly amount of milk production and distribution. Australia. Besides India. Singapore. The establishment of Amul is also known as White Revolution. Bangladesh. it also demonstrated the power of "collective might". UAE. The word ³Amul´ means ³priceless´ in Sanskrit. Gujarat. Amul has entered overseas markets such as Mauritius. it is the world¶s largest vegetarian cheese brand. Hong Kong and a few South African countries. (GCMMF). It is a brand name managed by an apex cooperative organisation. which has made India the largest producer of milk in the world. Gujarat Co-operative Milk Marketing Federation Ltd. which when further converted into INR gives around 67113 million. A small set of poor farmers of Kheda district in Gujarat had the vision and foresight to act in a way that was good for the society and not for the self alone. Other potential markets being considered include Sri Lanka. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1504 million as stated in the year 2008-09. Aside from the great measurable success that this project was. USA. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006±07). which today is jointly owned by some 2. Its bid to enter Japanese market in 1994 did not succeed. but now it has fresh plans entering the Japanese markets. Amul has spurred the White Revolution of India. Currently Unions making up GCMMF have 2. India.16 million litres per day.Amul  Introduction: The Taste of India Amul is a dairy cooperative formed in India in the year 1946. The brand name ³Amul´. Also.

the government at that time had given monopoly rights to Polson Dairy (around that time Polson was the most well known butter brand in the country) to collect milk from Anand and supply it to Bombay city in turn. in 1973. With the creation of GCMMF (AMUL). The Kaira District Cooperative Milk Producers¶ Union Limited was registered on December 14. Often milk went sour as producers had to physically carry the milk in individual containers. Sardar Patel advised the farmers to form a Cooperative and supply milk directly to the Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices to the producers). He sent Morarji Desai (who later became Prime Minister of India) to organize the farmers. especially in the summer season. 1946 as a response to exploitation of marginal milk producers by traders or agents of existing dairies in the small town named Anand (in Kaira District of Gujarat). the Polson Dairy in Anand. Angered by the unfair and manipulative trade practices.. the Gujarat Co-operative Milk Marketing Federation (GCMMF) was established. The Kaira District Co-operative Milk Producers¶ Union Ltd. they managed to eliminate competition between Gujarat¶s cooperatives while competing with the private sector as a combined stronger force. GCMMF (AMUL) has ensured remunerative returns to the farmers while providing consumers with products under the brand name ³Amul´. The foundations of a modern dairy industry in India were thus laid since India had one of the largest buffalo populations in the world. as most producers were marginal farmers who were in a position to deliver 1-2 litres of milk per day. Milk Producers had to travel long distances to deliver milk to the only dairy. Origin: The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the country. Sabarkantha and Surat were organized. In winter. These agents arbitrarily decided the prices depending on the production and the season. Village level cooperatives were established to organize the marginal milk producers in each of these villages. Moreover. it was decided to set up an apex marketing body of dairy cooperative unions in Gujarat. Baroda. The success of the dairy co-operative movement spread rapidly in Gujarat. Thus. Milk collection was also decentralized. In order to combine forces and expand the market while saving on advertising and avoid a situation where milk cooperatives would compete against each other. Business Economics: Case Study Amul 122 Page 4 . the producer was either left with surplus / unsold milk or had to sell it at very low prices. Within a short span five other district unions ± Mehsana. decided to hand over the brand name to GCMMF (AMUL). In 1946. which had established the brand name ³Amul´ in 1955. Banaskantha. the farmers of Kaira District approached Sardar Vallabhbhai Patel (who later became the first Deputy Prime Minister and Home Minister of free India) under the leadership of the local farmer leader Tribhuvandas Patel. the farmers of the area went on a milk strike refusing to be further oppressed. Indigenous R&D and technology development at the Cooperative had led to the successful production of skimmed milk powder from buffalo milk ± the first time on a commercial scale anywhere in the world. India ranked nowhere amongst milk producing countries in the world in 1946. Thus the Kaira District Cooperative was established to collect and process milk in the District of Kaira in 1946.

confer a beneficial health effect on the host. They help in digestion.7 per cent. In its recent report. Amul has gone to win one of the world¶s most prestigious awards ± The International Dairy Federation Marketing Award (2007) for Amul pro-biotic ice-cream launch. especially of milk sugar (lactose). However.7 per cent globally. Accordingly. with 0. way ahead of the US and Germany with 79. for the first time in India and the world GCMMF introduced the Amul range of Pro-biotic and sugar free ice-creams aimed at the health.4 per cent market share. Probiotics are live beneficial culture which. Amul has also been ranked among ³the top 21 largest dairy businesses in the world´ according to the findings published by the International Farm Comparison Network (IFCN) at the 10th IFCN Dairy Conference 2009. thus entering the top league for the first time. with substantial growth having taken place during the last two years at Amul. Where does Amul stand in the global market? Amul topped as the winner of the ³Best of All´ Rajiv Gandhi National Quality Award for the year 1999. Business Economics: Case Study Amul 122 Page 5 . Dairy Farmers of America and Nestle of Switzerland secured the first three places with market share of 2. stood 21st in the list. over 60 dairy-related companies. customer satisfaction as well as societal and environmental impact. India with its milk production touching 114. its ranking would improve to almost at the 16th place in the current year. Amul.4 million tonne respectively. This IFCN analysis was based on IFCN Daily Report 2008 with data representing the year 2007. representing milk volumes collected plus commodity purchased in home country and subsidiaries in other countries.4 million tonne during the year under review is the largest milk producer in the world. GCMMF is the first and the only Indian organisation to receive the 2007 IDF Marketing Award which covered 3 categories: o Nutri-marketing o Innovation o Marketing Communication Amul Pro-biotic Ice-cream received the award in the Nutri-marketing category.3 per cent and 1. business processes. After emerging as India¶s topmost brand.3 million tonne and 39. The IFCN is a network of dairy researchers responsible for analysing global dairy trends and creating knowledge to guide various stakeholders in the dairy sector covering about 80 countries. Thanks to the White Revolution pioneered by Amul. a number of dairy-related institutions and dairy farmers. when administered in adequate amounts. 2.The award which is considered to be equivalent to the Malcolm Balridge National Quality Award of USA and the European Quality Award is the most prestigious award which recognizes achievements of an organization in terms of excellence in business results. IFCN has provided ranking of dairy processors by its milk intake. Fonterra of New Zealand. held at Stockholm during June 14-17. In January 2007.conscious and diabetic.

where the base and the recipes were made available to restaurant owners who could price it as low as 30 per pizza when the other players were charging more than 100. to diabetic people. converting it into goods worth 6 crore and distributing it to more then 5. 4) ³Emmental´.000 retailers across the entire country is not an easy job. 5) Product for the µprice sensitive India¶ ± ³Low priced Amul Ice Creams´ and the very affordable ³Sagar´ whitener. Some of the numerous products introduced by Amul are listed below: 1) Chocolate milk under the brand name of ³Amul Kool Koko´ targeting the youth of today. Low Cholesterol Bread Spreads´ for the health conscious. Thus.6 million farmers everyday. No other dairy in India has such a sustainable procurement network. Very strong presence in Indian market: Category Butter Milk powder Cheese Ice-cream Sweets Chocolate drink Chocolate Market share 85% 40% 50% 24. However. SWOT Analysis: Strengths y Competitive Sustainable Advantage (CSA): Amul¶s CSA lies in its procurement part. it enjoys enormous support from a large target audience. It has introduced products for target audience ranging from youth. and from the health conscious to the urban class. 6) It also entered the pizza business. Business Economics: Case Study Amul 122 Page 6 . Amul has so far been extremely organized and thus successful in managing its large scale supply chain. ³Gouda´ and ³Pizza Mozzarella Cheese´ for the likes of the urban class.22%) 50% 90% 10% (Cadbury ± 70%) Market position 1 1 1 2 1 1 3 y y Impressive product portfolio: Amul has shown a vast range of products. 00. 3) ³Low Fat. The ability to collect 7 million litres of milk from 2.75% (HUL ± 28. 2) India¶s first pro-biotic ³Wellness Ice cream´ and ³Sugar free Delights´ for diabetic people. which begins with the milk producer and ends with the goods being supplied to the customers all over the country via retailers.

every time an event of local. Business Economics: Case Study Amul 122 Page 7 . Unlike maintaining standard products on the shelves. it continuously comes out with new products and new schemes. Marketing strategy: Amul has had a very strong marketing strategy at its disposal. affordable price: The quality of all the products of Amul is on par with international standards. the price is comparatively less and affordable as all the products are manufactured within the country. y I personally feel that one of the best methods used by Amul to promote their No. as well as attract new customers. as well as advertisements as a tool to connect with the audiences. was the 1966 launch of the round-eyed. As a result of this. Amul Butter. the availability of all the products is very good. However. it has been possible for them to keep their customers loyal. The Amul ads are one of the longest running ads based on a theme. as their distribution network is very strong.1 product. chubby-cheeked Amul moppet who put Amul on India¶s breakfast table . national or global importance occurred. the demand for Amul products is very high from the consumers. It has very good communication with its customers. television or even radio.y High quality. due to affordable fares. Since its launch. Also. hoardings. it has been very beautifully been depicted by in the ³Utterly Butterly Delicious´ ad-campaigns on billboards and hoardings. At the same time.³The Utterly Butterly´ girl. now vying for the Guinness records for the longest running ad campaign ever. be it through advertisements.

However. if there is a power failure. However. the transportation link in the supply chain may get delayed due to many political as well natural reasons. you need to store all dairy products. many of the dairy products including skim milk. Dependency on villages: Amul has an extremely strong dependency on weak infrastructure and is completely dependent on villages for its raw materials. Also. which can cause damage to the products due to their limited shelf life. ice cream and frozen yogurt have a very short shelf life of not more then 34 days. y Short shelf life of products : As it is known. Consumption of dairy products that have crossed their expiry dates is extremely unhealthy and harmful for health. then these products need to be consumed within 4-6 hours. because the chances of them getting spoiled increase considerably after 6-7 hours. the GCMMF supply chain system has a huge amount of human labour under its wings. Retailers and finally the consumer (i. Whole milk keeps for about a week after the store expiration date. Further. after refrigerating dairy products. Amul mainly manufactures dairy products i. VCS. most of its products are made from milk. Up to the mark infrastructure for the manufacture of the various dairy products is not available at many of its manufacturing units.e. the people consuming their products). including milk and cheese. MUs. it hits the manufacturing unit hard. we.e. Even if there is a small glitch in the working of one of these departments as a result of some political disturbance or even a natural calamity. It forms a chain of people ± farmers.Weaknesses y Risks of highly complex supply chain system: As shown above. Distributors. in the refrigerator. and that can result into delay in supply. y Business Economics: Case Study Amul 122 Page 8 .

but now it has fresh plans entering the Japanese markets. Use of internet to sell its products: As a first step towards eCommerce in India. Hence. Singapore. One of the other potential market being considered at this stage is neighbouring Sri Lanka. USA. y y In order to improve further. Though Amul¶s hoardings have been a huge hit in the cities. packaged ready-to-eat foods etc. Amul can try to understand the cause of this through market research and work on improving these products and thus gaining the audience¶s trust and loyalty.. Bangladesh. Chocolates etc. which have not been as successful and popular as compared to Amul Ice Cream. Huge scope in the American market: More then 50% of Americans are medically obese. Pure Ghee. y y Business Economics: Case Study Amul 122 Page 9 . There are certain Amul products like Amul Basundi. offering low-fat versions of its brands would make a lot of commercial sense. Amul¶s Mithaee Gulab Jamuns are some of the products being marketed in the American markets. Nutramul. Its bid to enter Japanese market in 1994 did not succeed. it can definitely expand its market to a large extent. the ³Taste of India´ has now become just a few clicks away from our doorstep. If Amul is really looking forward to capture the hearts of the Indians settled in the USA. Thus. Sponsoring shows on TV and sports events can be of great help. Gulab Jamun. and at the same time make its presence felt at the global level. Shrikhand. Amul has offered the cyber shopping experience with a wide range of Amul dairy products in all the major cities of our country. Amul can take advantage of the following ideas and opportunities: y Amul can venture out on new products like Toned Milk and Condensed Milk that can be used for preparing baby food products and sweets.Opportunities y Going global: GCMMF has signed an agreement with Wal-Mart to stock its shelves with products under its Amul brand name. China. UAE. Amul Processed Cheese. targeting the large Indian community in the USA markets with its niche products like Mithaee. it can penetrate even better in the rural areas by advertising through the media like cable channels and newspapers. Hong Kong and a few South African countries. Its overseas markets include Mauritius.. Australia.

This may prove to be a hindrance for Amul in the global market. they tend to consume margarine as a substitute. due to change in government policies. Nestle HUL Nestle. It has now become possible to import milk products from various countries around the world. and even ice creams made from soya (Baskin Robbins)! Also. Amul has seen excellent competition from Vijaya (for Cheese. However. the price of all the commodities including milk has increased to a 34 per litre. the demand for Amul products had seen a dip as when compared to earlier times. the yield of Indian cattle is still much lower than other dairy countries because of unhygienic conditions and non-availability of proper food for the cattle. Nestle Nestle. as people have become health conscious. there have been modifications in the Import Policies made by the Government of India. As a result of this. y y Growing price of milk and milk products: The rates of milk have kept on increasing over the years. Soya Products & Margarine: Now-a-days. there has been a growth in production of Soy Products like. So. there are various dairy companies. Soya Paneer. Ghee and most importantly Pasteurized Milk). The new entrant in the dairy market has been Govardhan (for Cheese. Heinz y Stiff competition: In the past few years. Standard of Indian cattle: At today¶s date. Also. These further results into increased rates of dairy products. Butter and Ghee).Threats y Competitors: Given below are some of the major competitors for Amul: Product/Brands Cheese Butter Ice creams Curd Paneer Flavoured milk Baby food Competitors Britannia Britannia. Butter. which have given a stiff competition to Amul. MNCs as well as local. HUL (for Ice Creams) and Cadbury (for Chocolates) have been very strong contenders for the top spot against Amul. y y Business Economics: Case Study Amul 122 Page 10 . Soya Milk. now costing around production cost of dairy products for Amul has increased too. India has the highest population of cattle around the world. over the last 10 years. Mother Dairy Britannia Britannia. the considerable extent. There was a time in the 90s when it was available at around 18 per litre in retail. However. Government Import Policy: In the span of the last 5 years.

com Business Economics: Case Study Amul 122 Page 11 .thehindubusinessline.co.wikipedia.com http://en. The product quality is very good«. My view: Looking at the current trend.  Bibliography: http://www.google. I feel that Amul will definitely have a consistent growth in the national as well as international market.org http://www.amul. the taste has been accepted by the masses« Amul is rightly said to be ³The Taste of India´.in http://www.