Principles of Marketing Group 3 BM-D

Amul (Milk and Tru)

1. Macro-Environmental Analysis

1.1 Political:

Dairying and Animal Husbandry is a source of livelihood for ten crore milk producers, and it
contributes 4.5% to the National GDP (28% to the Agriculture GDP). With 188 Million Metric
Tonnes of Milk production and USD 105 billion worth, Milk production is India’s largest
agricultural sector. India has a 21% share in global milk production, and it has been growing at a
rate of 4.5% for the last two decades, while the Global Milk production is only increasing at 2%.

“Atmanirbhar Bharat” initiative by the Hon’ble Prime Minister is in line with Amul’s
innovational inclinations and goals. Vibrant demography, world-class infrastructure, technology-
driven systems, robust supply chain, and an economy geared up for quantum leaps are the five
pillars of Atmanirbhar Bharat. Amul is empowering the farmers, even from arid regions, to earn
a decent income by cattle and dairy farming, thus empowering farmers with economic sufficiency
and helping India become ‘self-reliant’ when it comes to milk and dairy products since Amul’s
inception.

India’s choice to refrain from joining the regional Comprehensive Economic Partnership (RCEP)
has been a boon for Amul and many Dairy farming communities in India. It avoided dumping of
Dairy products from New Zealand and Australia and protected livelihoods and standards of living
of many Dairy farming families. This move has also saved consumers from cheaper and less
nutritious milk. Currently, Indians get the best quality milk at most affordable prices. This action
can also help India to achieve the dream of “Doubling of farmer’s income.”

India has assigned high priority for the Dairy sector and planned for its growth. India is projected
to produce 330 Million Metric Tonnes of milk by 2033, will be a USD 200 Billion Industry, and
contributes to 31% of milk production by 2033. 1.3 crores of new jobs are expected to be created
by 2033.

During COVID, the officials at various levels have been very supportive of the Amul owing to
its farsightedness and preparedness. The government declared milk and milk products as
permitted essential services during the lockdown. Despite all these, Amul didn’t budge on
farmers’ remuneration.

The Union Finance Minister has announced INR 15,000 crore for Dairy infrastructure fund for
supply chain, dairy enhancing, and milk processing. This policy can highly benefit Amul and its
stakeholders: the farmers. Amul has stated that it can build an extra capacity of 4-5 crore litres of
milk and can provide a livelihood to 30 lakhs of people in Rural India. The Finance Minister has
also announced a 4% interest subvention scheme for cooperatives. INR 13,343 crores are allotted
for the eradication of Foot-and-Mouth Disease and Brucellosis disease by the Finance minister.
It will save INR 60,000 crore lost in milk production.
Principles of Marketing Group 3 BM-D

While opening the Chocolate factory of Amul, Hon’ble Prime Minister has given Amul a goal to
become a top-three dairy organization in the world within the next decade. If we observe the
policies and competencies, there is no doubt that Amul will become one soon.

1.2 Economic:
Amul saliently carries an economic significance in its history itself, since it was initially named
Amulya, or priceless, before assuming Amul’s name(Anand Milk Union Limited). Today, it
stands as the largest dairy cooperative globally with collective ownership by over 36 lakh
farmers(milk producers). In fact, a film, Manthan, was also made on the co-operative, for which
farmers had contributed Rs. 2 per head to pool resources for the funds to make the film, and made
it a commercial success as well. The film also bagged the best Hindi feature film award in 1977.

As per the analysis of Amul’s financial report of October 2019 by ICICI Securities, the co-
operative has seen a threefold increase in revenues per annum in less than seven years. It has also
been rapidly increasing its reach globally, with a mega plan of strengthening its distribution
network with over 10 lakh outlets. Despite having its lowest growth rate in a decade in FY 2017-
18, it has bounced back to growing at the double the pace that it had in the previous year.
Moreover, Amul has also brought in a plan for getting itself more organised. Currently, only 27%
of the industry is organised. It plans to extend this figure to 40% as the brand has consistently
been drawing international attention with its rapid expansions to about 20 countries other than
India. 2018-19 itself saw a 174% growth in its exports.

The brand has been working on all fronts, be it internal or external. Across the past four years,
Amul has been launching new products at a rate of 2 products per month. So far, none of these
has seen rollbacks or halt in sales. Amul has also been working upon its Cafe experience, with a
pilot model running in Gujarat for over five years now, serving cuisines ranging from South
Indian food to multiple Pizzas varieties. The only external factors that play a significant role in
the company’s finances are the fuel prices, since Amul’s business is road-transportation massive,
with more than 400 lakh litres of milk being transported daily from 18700 village cooperative
societies. The rise in Diesel prices, on which most heavy vehicles are operated, poses a threat to
its operations.

On the other hand, the brand has strengthened itself across India, and this was evident with the
people’s reliance on its products during the pandemic. Amul was one of the very few
organisations that were successful in drawing a higher consumer demand. As per Amul MD, RS
Sodhi, during the lockdown, Amul had been operating at 115% of its actual capacity and had to
hire other plants that weren’t procuring milk. One of the primary reasons for this also happens to
be the recent boost in its advertising, where Amul doubled its investment and fired up its online
and television-based marketing routes. It has resulted in the runtime of Amul ads being increased
at 316% as compared to the previous year, and this has been a smart move because that’s where
the investment statistic comes in: they availed a viewership of over 10 Indian Premier Leagues
for barely a tenth of its cost!