PROJECT REPORTON

BY

MUDIT RANJAN

IN THE PARTIAL FULFILLMENT OF

MASTERS IN MARKETING MANAGEMENT

UNIVERSITY OF PUNE

SUN HI – TECH MANAGEMENTDEVELOPMENT AND RESEARCH INSTITUTE

AFFLIATED TO

PUNE UNIVERSITY.

EL – 39/5 , MIDC , BHOSARI , PUNE – 411026.

:- 2006 – 2008 -:

TABLES OF CONTENTS

• Preface

• Acknowledgment

• Executive Summary

• Significance & the need of the study

• Objective

• Research Methodology

• Industry Background

• Company’s Background, Origin & Brand Building Process

• Competitive Situations

• Product Range

• Analysis

• Observations & Findings

• SWOT Analysis

• Suggestions

• Conclusion

• Bibliography

• Questionnaire

PREFACE

This project has been a memorable experience and a great opportunity for me to associate with one of the top companies in INDIA Gujarat Co-operative Milk Marketing Federation (AMUL).I am very grateful to the people by whose assistance and cooperation I got my project successfully completed. It gave me an opportunity to know the practical aspects of marketing and to acquaint myself with modern environment management.

This project is all about the customer perception of Gujarat Co-operative Milk Marketing Federation (AMUL), their satisfaction level and customer’s loyalty towards AMUL PRODUCTS (MILK).

In this project, I tried to find out the perceived potential of AMUL in Lucknow by directly visiting to Amul milk’s customer and collecting the relevant information.

I do hope, I have made a useful attempt so as to meet the project brief given to me and that the project would be able to deliver desired results that can benefit Gujarat Co-operative Milk Marketing Federation (AMUL) in incorporating those results while formulating their marketing strategies.

ACKNOWLEDGEMENT

Firstly , I express my profound gratefulness and to Sun – Hi Tech Management Development and Research Institute for giving me the opportunity to do a project work for my Masters in Marketing Management course , which helped me to gain work place experience to help to pursue my career.I owe a deep debt of gratitude to GUJRAT CO – OPERATIVE MILK MARKETING FEDERATION , which is so called as ANAND MILK UNION LIMITED (AMUL) for giving me opportunity to do a project work at their place.

I hereby owe my profound gratefulness to Mr. Dinesh Mehrotra (MMO Incharge) and Mr . Manish Saxena (Sales Incharge) for giving me all the knowledge about the company . I also owe my profound gratefulness to Mr . Rajan Umap (Academic Coordinator) and Vishwas Vyshyampyan (Internal Guide) for guiding me valuable ideas which helped me in developing and completing this report.

MUDIT RANJAN

EXECUTIVE SUMMARY

This project report presented contains detail my summer training assignment. This is a part of my curriculum of P.G.D.B.M program (2006 – 2008) Pune University. The training was conducted in Gujarat Co-operative Milk Marketing Federation (AMUL) Lucknow.

The project assigned for the period of 2 months was Sales promotion of Amul milk and also to find the Market share of Amul milk in comparison to other pouch milks and loose milk among the customers of Lucknow. The aim of this project was evaluating the position of Amul milk among customers on different parameters, creating awareness about the various products of the company, brand image and generating leads for future business prospects.

Bright highlight of the methodology used for the survey project:-

1) Filling the questionnaires by various individuals which are given by my project guide.

2) Sampling on cluster random basis.3) Coding4) Analysis5) Final report construction

In the current business scenario, to know about the competitors marketing policies and schemes is equally important as emphasizing on company’s own policies.

LIMITATION OF STUDY :-

1) Wide area of Lucknow had to be covered in short span of 2 months.

2) Some of the individuals were very apprehensive about responding.

3) Some respondents could not provide any time for the survey because of their busy schedules.

4) Biasness is the most serious limitation although measures have been taken to reduce the biasness.

The survey conducted reveals that though there is an excellent image of Gujarat Co-operative Milk Marketing Federation (AMUL) in market & among the customers.

The time spent at Gujarat Co-operative Milk Marketing Federation (AMUL) office, provide me an insight into the corporate world functioning. This opportunity enabled me to learn basics of marketing skills. Also this has been an excellent exposure to the

corporate world and has helped me sharpen my skills and knowledge of business environment. This project report is prepared after thorough analysis and in intended to be conclusive and comprehensive.

The learning of this project would go a long way in my future assignments which I would undertake.

SIGNIFICANCE AND THE NEED

OF THE STUDY

Market research is concerned with the authentic and objective collection, analysis and evaluation of information about specific and practical aspects of marketing problems in order to help the management in making effective decisions. Market research is not an end in itself but it is means to an end.

My study on this project will help the company to know its strengths and weaknesses with respect to other brands available in the market and to make strategic future decisions to improve its market awareness and penetrations and thus finally enhance its services.

• Primarily this study will enable the company to evaluate its position among the competitors in respect to all important factors related.

• Secondarily this study will enable the company to check the customer perception about Gujarat Co-operative Milk Marketing Federation (AMUL) …and judge the market share of AMUL milk in comparison to other pouch milks and loose milk in LUCKNOW.

OBSERVATIONS AND FINDING:-

1) In the consumer survey it came out that 96% people are aware of Amul milk. So almost every person is aware about Amul milk.

2) The two most important media of spreading awareness about Amul milk are television and wall paintings.

3) Only 37% of people prefer to buy pouch milk rest of them prefer to use loose milk.

4) Market share of Amul milk is less than its competitor PARAG.5) In consumer survey it came out that from all the customers of Amul

milk only half of them are there loyal customers, remaining prefer to buy Amul milk along with Parag & other brands.

6) Consumers prefer to use Amul Gold (Full Cream) than Amul Tazza (Toned Milk) might be because of it’s good taste.

7) Amul milk reaches to the customers mostly by the retailers, than by the road side vendors. The home delivery is also becoming an important way so selling Amul milk as some retailers and new APO’s are providing home delivery.

8) Most of the customers know about the good taste and quality of Amul milk as it is shown in analysis that 66% of customers repurchase Amul milk.

9) Customers rate Amul milk as good quality milk. 10) About pricing of Amul milk most of the customers say that it is

average.

11) They have complaints about 1 liter. Pack as its price is one rupee more than its major competitor’s price.12) Some customers also have complaints about the availability of amul

milk.

SWOT ANALYSIS

STRENGTHS

• Amul is India’s one of the major company of producing pouch milk.

• In just over few years, there are so many customers across the country & the number keeps on increasing.

• The good taste, quality and brand image of Amul milk is playing a important part in competition with other pouch milks. • Amul is having nearly a large market share in the pouch milk segment. This reveals that Amul is undoubtedly a market leader in this segment.

• Customer satisfaction level is very high.

• Company is having a very good Distribution Channel all over the country. So any kind of delay in delivery is not possible.

• To enhance the service quality of products is having a full fledge R&D department. This department is consistently involved in producing better quality products.

• The sales force of company is very effective.

WEAKNESS

• The product range is not very large as company is having only two main variants in (500 ml & more) pouch milk segment.

• Advertisements on Television and in Print media can be increased.

• Less number of exclusive outlets in the main market.

• Distribution is not as strong as its major local competitors.

OPPORTUNITIES

• As the customer perceives that the company is good so company should expand its area of operations and should go in new markets.

• Company can offer products at lower price.

• As the middle class income level is increasing very rapidly so the company can also make use of this data also to attract more customers.

• By home delivery at door step of customers in quick time can earn more repute and value from customer.

• Milk market in INDIA is growing at quick rate per year.

THREATS

• The biggest threat in this highly competitive market is from competitors.

• The pricing strategies of the competitors.

• Higher price pouch milk in comparison to competitors.

• Changing preferences of the customers.

• As the various alternatives are available in the market so the customer can go for other options.

• Rising manufacturing cost.

SUGGESTIONS:-

In order to maintain and increase market share of Amul milk in the city of Lucknow, the following recommendations regarding distribution and promotional policies are hereby suggested.

First and the foremost action is that Amul should improve its service and availability.

Margins should be tailor made; it should be dependent on the sales of particular outlet.

Amul should do more for the new outlet and for exclusive Amul Parlours. Amul can insist retailers to do home delivery.

Amul should give some local advertisement and it should mention exclusive Amul retailer of the city.

There should be a proper route planning beat.

The company’s personnel should head the distributor because the retailers believe in company and not the distributor.

There should be more distributors for proper supply of products.

Company should replace the damage product as soon as possible because this problem is very common in all shopkeepers.

The pricing of one liter pack of Amul is one rupee more than their major competitor PARAG in Lucknow

There is still possibility in improvement of supply so that irregularity in supply is reduced, as retailers has complaints about improper supply. Amul can increase the variants of pouch milk .As PARAG has launched ATM system so Amul should go for the same.

CONCLUSION:-

This survey was done to assess the market share of Amul milk among the customer at various places in Lucknow, so that company can follow the weak points of its policies and make efforts to rectify them in future to increase its market share.

Due to improper services & lack of availability most of shopkeepers and consumers are reluctant to deal with Amul.

Less margin as compared to other companies, is also one of the prominent factor that retailer don’t want to take Amul.

Due to low promotional schemes consumers don’t want to buy Amul milk.

The quality of Amul milk is good and brand image is also very good but due to poor services and availability it becomes useless.

The satisfaction level of shopkeepers is also very low due to company’s response towards complain is not good.

Bad promotional policies of Amul, mostly people do not recall advertisement of Amul, people don’t know about full range of Amul products.

Mostly distributors deals with the retailers who are not enough capable of handling the situation and due to this retailers gets away from brand.

Most of customers don’t prefer to buy Amul milk because of its higher price than its major competitors.

QUESTIONNAIRE

CONSUMER SURVEY-LUCKNOW

Guidelines to respondent: The questions are close ended in nature. Each question is followed by few options. Mark ( ) the option which best suits you. These are not correct or incorrect answers. Your response will keep completely confidential and it will used only for the purpose of completion of the project.

1. NAME –

2. ADDRESS--

3. INCOME GROUP--

a) Less then 5000 b) 5000 – 10000 c) 10000-15000 d) 15000 & above

4. Do u heard about Amul pouch milk?

a) YES b) NO

5. If, yes how you come to know about Amul pouch milk?

a) Hoarding b) Television c) Wall painting d) Newspapers

e) Household survey

6. What type of milk do you buy for regular use?

a) Loose milk b) Pouch milk

7. If pouch milk then which of the brand you were buying earlier?

a) AMUL b) PARAG c) OTHERS

8. Do you buy Amul pouch milk only?

a) Yes b) Along with {(I) PARAG (II) OTHER}

9. Which variant do you buy?

a) Amul Gold ( Full cream milk) b) Amul Tazza ( Toned milk )

10. Where do you buy Amul Milk?

a) Retail outlets b) Home delivery boy c) Road side vendors

11. Have you repurchase Amul milk?

a) Yes b) No

12. Why do you buy Amul milk?

Criteria Excellent Good Average Poor

Quality

Price

Brand Image

Services

Availability

13. Any suggestions you want to give about Amul Milk?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

BIBLIOGRAPHY:-

o Internet: www.amul.com www.amulb2b.com www.agencyfaqs.com www.magindia.com www.sify.com www.mouthshut.com www.thehindu.com www.indiantelevision.com www.indiadairy.com www.etgmr.com www.etstrategicmarketing.com www.tribuneindia.com www.economictimes.com www.indiatimes.com www.rediff.com http://www.youthxchange.com

www.indiainfoline.com www.india-seminar.com

o Magazines: USP AGE, August 2004 Business Today Business World

o News papers: Times of India Economic Times

ANALYSIS

1. INCOME GROUP—

Less than 5000 24

5000 – 10000 98

10000 – 15000 151

15000 & above 227

2. Do you heard about AMUL POUCH MILK

Yes 482

No 18

3. If, yes then how you come to know about AMUL pouch milk ?

Hoarding 112

Television 377

Wall painting 326

Newspapers 58

Household Survey 27

Media spreading awareness about Amul milk

4. What type of milk do you buy for regular use ?

Loose Milk 313

Pouch Milk 187

5. If pouch milk then which of the brand you were buying earlier ?

AMUL 172

PARAG 217

ANY OTHER 23

6. Do you buy AMUL Pouch milk only ?

Amul 87

Along with Parag & any other 85

LOYAL customers of AMUL milk

7. Which variants do you buy?

AMUL GOLD 127

AMUL TAZZA 45

8. Where do you buy Amul milk?

Retail outlet 90

Home delivery boy 25

Road side vendor 57

Point of purchase

9. Have you repurchased Amul milk?

Yes 168

No 332

10. How do you rate Amul Milk?

Criteria Excellent Good Average Poor Total

Quality 88 178 214 2 482

Price 63 91 256 72 482

Brand image

151 195 136 0 482

Service 25 158 263 36 482

Availability 95 147 171 69 482

RESEARCH OBJECTIVES

The sales team at Amul assigned me the project “market share of Amul milk in comparison to other pouch milk and loose milk in Lucknow” with the following broad objectives:-

To determine the awareness level of variants of Amul milk among the customers in Lucknow.

To determine the preference levels of various customers and the kind of milk they are buying.

To determine the satisfaction level of the milk and services provided by Amul in Lucknow.

To determine the various factors influencing buying decisions. To determine the expectations of customers from the company. To determine the customer perception about milk and services offered

by Amul.

These objectives were achieved by following a well thought plan and defining the problem for each objective separately.

RESEARCH METHODOLOGY

RESEARCH DESIGN

The report is conclusive one. I visited the place of lucknow and contacted retailers and customers.

The efforts were to inculcate a variety of outlets so as to evince the deep information and facts regarding the market mechanism and customer perception about Amul milk available in the market.

DATA COLLECTION METHOD

PRIMARY SOURCES

(a) Direct integration with retailers.(b) Integration with company distributors and personnel.(c) Integration with the various customers.

SECONDARY DATA

(a) From the company website, brochures of various products available in the market.

(b)From the competitors website.(c) From various newspaper and magazines.

SAMPLING

Sampling method is used to know the opinion of the customer regarding Amul pouch milk and what are the changes they want in the product.

SAMPLE SIZE DETERMINATION

A sample size of 500 individuals was determined on a random basis, which existed in the Lucknow. So that sample size is large to get the right information with less error. As error is inversely proportional to N (size of

sample) and this is not so large that any distortion comes in conclusion due to some fault of miscommunication.

FIELD WORK

It includes the following :-

1. ROUTE RIDING

I spent the time in market for collecting the information about the various product of the company at different retail outlets and knowing the opinion of the retailers and as well as customers.

2. DATA COLLECTION

I covered the different outlets in Lucknow. Interactions with dealers and the retailers provide me experience, knowledge. It also helped me to get information regarding customer choice and the taste. It helped me out in making my report assessing the Market share of Amul milk in comparison to other pouch milk and loose milk in Lucknow and also about their taste and preferences and what should be done to overcome those problems.

3. DIRECT INVOLVEMENT

I helped me in knowing the problems of the retailers and market which helped the company to know its strengths and weaknesses.

4. RESEARCH INSTRUMENTS

(a) Observation :- Careful observation of the outlets were done where Amul milk is being sold along with other companies pouch milk and questions were asked from retailers why they prefer to sell

other companies pouch milk in the same segment where Amul milk is already as everyone knows the good quality and brand image of Amul.

(b) Questionnaire :- Structure non disguised questionnaire and structured disguised questions has been asked from the respondents to collect information about company products and their performance level.

The questions generally asked to achieve the desired objectives which were:-

Who are the competitors of the company?

Is pouch milk of the company is satisfactory?

What is the customer perception regarding the pouch milk of

the company and its brand image?

Does company solve their complaints (if any) completely?

Filling the Questionnaire: - Filling the questionnaire by various individuals of various places of Lucknow. The commencement of field work included the process of getting the questionnaire filled up and also getting all the relevant information regarding the visibility of Amul for future business decisions.

INTRODUCTION:-

Gujarat Cooperative Milk Marketing Federation

MISSION

GCMMF endeavor to satisfy the taste & nutritional requirements of the customers of the world, through excellence in marketing by their committed team.

 Through co-operative networking, they are committed to offering quality products that provide best value for money.

VALUES

1. Customer Orientation                                 2. Commitment to producers

3. Integrity                                                      4. Co-operation

5. Excellence                                                  6. Leadership

7. Quality                                                       8. Innovation

9. Growth orientation – new products         10. Belongingness

11. Pride in organization                              12. Employee satisfaction

Amul: The Origin

GCMMF, known through its popular “desi brand”, Amul.

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the Himalayas. Similar is the story of Amul which inspired 'Operation Flood' and heralded the 'White Revolution' in India. It began with two village cooperatives and 250 liters of milk per day, nothing but a trickle compared to the flood it has become today. Today Amul collects processes and distributes over a million liters of milk and milk products per day, during the peak, on behalf of more than a thousand village cooperatives owned by half a million farmer members. Further, as Ganga-ma carries the aspirations of generations for moksha, Amul too has become a symbol of the aspirations of millions of farmers. Creating a pattern of liberation and self-reliance for every farmer to follow. 

The brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a quality control expert in Anand. The first products with the Amul brand name were launched in 1955. Since then, they have been in use in millions of homes in all parts of India, and beyond. Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of availability, of service.

There is something more, though, that makes the Amul brand special and that something is the reason for our commitment to quality and value for money. Amul is the brand name of 2 million farmers, members of 10,000 village dairy cooperative societies throughout Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga.In the early days of Kaira Union there was no dearth of cynics. Could ‘natives’ handle sophisticated dairy equipment? Could western-style milk products be processed from buffalo milk? Could a humble farmers’ cooperative market butter and cheese to sophisticated urban consumers? The Amul team – farmers and professionals – confounded the cynics by processing a variety of high-grade dairy products, several of

them for the first time from buffalo milk, and marketing them nationally against tough competition.

Amul: The secret of success

Between 1946 and 1952, AMUL's policy was directed towards obtaining monopoly rights for the sale of milk to the Bombay milk scheme. In 1952, it succeeded in achieving its purpose after the Government of Bombay cancelled the contract with Polson’s and handed over the entire business of supplying milk from the Kaira district to AMUL. However, as the Bombay milk scheme was committed to purchasing all the milk produced by the Aarey Milk Colony in Bombay, it would not take AMUL's milk during the peak winter months. The disposal of this surplus milk posed difficulties for AMUL, forcing it to cut down on purchases from its member societies, which affected members' confidence. The answer was the production of milk products: in 1955, a new dairy plant was set up at Anand to produce butter, ghee and milk powder.

A second dairy was built in 1965, and a product manufacturing unit was established in 1971 to cope with increasing milk procurement. In 1993, a fully automatic modern dairy was constructed adjacent to the original AMUL dairy plant at Anand.

As district union multiplied, Kaira cooperative recognized the benefits of a marketing federation and thus the Gujarat Cooperative Milk Marketing Federation (GCMMF) was established in 1973. GCMMF commenced marketing on April 1, 1974 under the single brand name of Amul. In 1978-79 it registered a turnover of Rs.100 Crore which grew to Rs.539.67 Crore in 1987-89. In 2002-03 the turnover stood at Rs. 2745.70 Crore. At present 2.28 million producer member with a total milk collection in 2002-03 being

1.86 Billion Liters. The success rate has been to the extent that GCMMF has now become India’s largest food products marketing organization.

Reasons for Success……

The start of a Revolution:

The revolution started as awareness among the farmers that grew and matured into a protest movement and the determination to liberate them. Over four decades ago, the life of a farmer in Kaira District was very much like that of his counterpart anywhere else in India. His income was derived almost entirely from seasonal crops. The income from milk buffaloes was undependable. The marketing and distribution system for the milk was controlled by private traders and middlemen. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader. Gradually, the realization dawned on the farmers that the exploitation by the trader could be checked only if marketed their milk themselves. In order to do that they needed to form some sort of an organization. This realization is what led to the establishment of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul) which was formally registered on December 14, 1946.

People’s power :

The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. What's more, it does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional

system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic up-liftment and common good.

Looking back on the path traversed by Amul, the following features make it a pattern and model for emulation elsewhere. Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations

Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment

Provide a support system to the milk producers without disturbing their agro-economic systems

Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers  and

Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change.

Total Quality management:

According to Mr. B M Vyas, Managing Director GCMMF: “We’re in between the two extremes – the customer and the farmer. Both expect the maximum intake. In one way, the customer wants to have the best product available at the lower price. On the other, farmer expects the maximum amount for his milk. To sustain in the business we have to make sure that we give them what they want”. As all these require a tight integration in the supply and value chain activities, GCMMF is able to excel it by educating the farmer and providing him the necessary guidance on one end and on the other end approaching the consumer with

the best product and understanding the Indian consumer better. The information technology and total quality management came together to help the GCMMF to gain control on the procurement, processing and distribution functions.

I.T. Initiative:According to Mr. B M Vyas, Managing Director

GCMMF, “Information Technology is our thrust area from our inception that is because we are marketing the perishable goods. There is every chance that we may collapse in between if we don’t understand the market realities and the village farmers. There should be a 24x7 hrs information flow in between us and the remaining nodes of our supply chain”. The need for coordinating a highly distributed system was clearly understood. Close coordination has been the main feature of the value chain.

The TQM Model- GCMMF

The GCMMF Value Chain

Enterprise Wide Systems: EIAS and GIS:-

GCMMF has connected its Zonal Offices, Guwahati Regional Office as well as Member Dairies, Milk Unions and its own Unit-Mother Dairy through VSAT for seamless exchange of “Online” information. All Sales Offices, C&F points & Wholesale distributors of GCMMF have been connected through TCP/IP Internet Mail Account for exchange of information.

In addition to the above, GCMMF is using Geographical Information System (GIS) at its Head Office and key Marketing Offices. Using the All India Map in GIS. They are in position to plot zone/depot boundary as well as pointer for zone, depot & distributor locations, which are superimposed by product-wise sales data. The same is being used for sales & distribution planning and review. Moreover, GIS is being used for business planning activity at milk centers and it covers animal census data. This has helped them to know average milk production and productivity of cows and buffaloes in Gujarat and track the animals and trend analysis etc. The EIAS customized ERP packages of GCMMF is designed in such a way that is can be plugged into various points of supply chain,

Managing Complex Supply Chains:-

Here I am going to describe the breakthrough vision that led to the simultaneous development of the market and supply side through a process of social development and education at AMUL.

Here I tried my level best to provide some insights into management of very large supply chains by adapting and integrating a variety of strategies and techniques. This includes building networks, developing trust & values in the network, developing fair mechanisms for sharing benefits across the supply chain, coordination for operational effectiveness, innovation and new technology for gaining competitiveness. It is noteworthy that these successes were achieved within the framework of a network of cooperatives organized in a hierarchical manner. There are many lessons in AMUL’s success not only for the cooperative sector but also for firms who intend to do business in emerging markets.

AMUL’s Journey towards Excellence:-

AMUL’s journey towards excellence is marked by some critical understanding of the business environment in large emerging economies like India where markets have to be developed by combining efficiency related initiatives with increasing the base of marginal suppliers and consumers. The essence of AMUL’s efforts was as follows:

It combined market and social development in an emerging economy. It recognized the inter linkages between various environments that governed the lives of marginal milk farmers and the unmet needs of consumers. It also changed the supply chain paradigm in order to reduce the cost to the consumer while increasing the return to the supplier.

It realized that in order to achieve their objectives, it had to benefit a large number of people –both suppliers and consumers. While large scale had the danger of failure due to poor control and required more resources, it also had the advantage of creating a momentum that would be necessary to bring more people into the fold and thereby help more suppliers and consumers.

It also realized that its goal could only be achieved in the long run and this required developing values in people and processes that were robust, replicable and transparent.

It also realized that the cooperative would not be independent and viable in the face of competition if it were not financially sound. This implied that AMUL had to develop distinct capabilities that would deliver competitive advantage to its operations. This would include long term cost containment, world-class deployment of technological resources and R&D, and better leveraging of scarce resources.

Characteristics of AMUL’s Approach to ExcellenceManagerialDimensions

Elements Implementation Mechanisms

Leadership Charisma, long term vision, commitment,trustworthy, selfless gain, strong managerial style (bordering on stubbornness), technocrat, pan-Indianvision/nationalism, persuasion

Constantly raising the bar,promoting a can-do attitude,communication of the vision tofarmers, consumers and thegovernment

Strategy Farmer Orientation, technology, cost leadership, product variety in later years

R&D focus, efficient supplychain, simultaneousdevelopment of suppliers &markets, financing projectsfrom internal accruals

Organization

Network of cooperatives, National DairyDevelopment Board, nature of professional managers

Democratic governance ofcooperatives, uniquecomposition and role of boardmembers of cooperatives,proactive role of the villagesocieties division at AMUL

Marketing Gujarat Cooperative Milk Marketing Federation

Product mix, pricing, dealernetwork, managing supply anddemand growth, advertisement

Leadership:

While Kurien Union (or AMUL) had the support of national leaders who were at the forefront of the Indian independence movement, its local leaders were trained in Gandhi’an simplicity17 and had their feet rooted firmly amongst people whom they had mobilized – the poor farmers of Anand. The foremost amongst them was Tribhuvandas Patel18 who had led the movement for the formation of cooperatives of small and marginal farmers in order to compete against investor owned enterprises on one hand, and keep bureaucracy away on the other hand. Tribhuvandas was the first Chairman of the cooperative. His skills lay in organizing the village producers, in making them believe in the power of cooperation and their rights towards improvement of human condition. He is remembered as fair and honest person whose highest sense of accountability to the members of the union laid the foundation of trust between network members19. Another important aspect of his remarkable management style was his gentleness and ability to repose trust in people – he gave complete autonomy to managers of the union and earned complete commitment from them20. Verghese Kurien21 was one such manager who would, first, shape the destiny of the Union and then the milk movement throughout the country.

Kurien emerged as the father of the dairy movement in India. He managed to keep the government and bureaucrats away from the cooperative22 and gave shape to the modern structure of the cooperative, worked tirelessly to establish the values of modern economics, technology and concern for farmers within the cooperative. He interfaced with global financing agencies to build new projects at AMUL. He worked with the Unions to bring the best of technology to the plants. He worked with marginal village farmers to create systems that would increase milk yields. He understood that without meeting the needs of customers he would not be able to satisfy his obligations to the farmers. In short, Kurien shaped the destiny of the milk movement in India through NDDB (as it’s Chairman) and particularly at GCMMF and cooperatives in Gujarat. Several young people left better paying jobs to help create a dream of making India the milk capital of the world. Kurien had learnt the persuasive charm of Tribhuvandas through plain speaking and had soon created a cadre of highly capable managers to

whom he had delegated both management as well as commitment. These leaders were created at the village, district and state levels in different organizations of the network.

urienurien had transformed AMUL from a dream into a major industrial entity – a network of plants, cooperative societies, research centers, an institute for training future managers in rural management, secondary

services like veterinary/artificial insemination expertise/feed factory etc. Kurien’s biggest strength lay in his ability to convince people that the cause of rural farmers was important thus establishing an important shared value. Subsequently, he could convince the government to replicate the AMUL model in almost all states of the country.

KK

Strategy:

AMUL’s business strategy is driven by its twin objectives of (i) long-term, sustainable growth to its member farmers and (ii) value proposition to a large customer base by providing milk and other dairy products a low price. Its strategy, which evolved over time, comprises of elements described below.Simultaneous Development of Suppliers and Customers : From the very early stages of the formation of AMUL, the cooperative realized that sustained growth for the long-term was contingent on matching supply and demand. Further, given the primitive state of the market and the suppliers of milk, their development in a synchronous manner was critical for the continued growth of the industry. The organization also recognized that in view of the poor infrastructure in India, such development could not be left to market forces and proactive interventions were required. Accordingly, AMUL and GCMMF adopted a number of strategies to assure such growth. For example, at the time AMUL was formed, the vast majority of consumers had limited purchasing power and was value conscious with very low levels of consumption of milk and other dairy products. Thus, AMUL adopted a low price strategy to make their products affordable and guarantee value to the consumer. The success of this strategy is well recognized and remains the main plank of AMUL's strategy even today. The choice of product mix and the sequence in which AMUL introduced its products is consistent with this philosophy. Beginning with liquid milk, the product mix was enhanced slowly by progressive addition of higher value products while maintaining desired growth in

existing products. Even today, while competing in the market for high value dairy products, GCMMF ensures that adequate supplies of low value products are maintained.

On the supply side, as mentioned earlier, the member-suppliers were typically small and marginal- farmers had severe liquidity problems, were illiterate and had no prior training in dairy farming. AMUL and other cooperative Unions adopted a number of strategies to develop the supply of milk and assure steady growth. First, for the short term, the procurement prices were set so as to provide fair and reasonable return. Second, aware of the liquidity problems, cash payments for milk supply was made with minimum of delay. For the long-term, the Unions followed a multipronged strategy of education and support. For example, only part of the surplus generated by the Unions is paid to the members in the form of dividends. A substantial part of this surplus is used for activities that promote growth of milk supply and improve yields. These include provision of veterinary services, support for cold storage facilities at the village societies etc. In parallel, the Unions have put in place a number of initiatives to help educate the members.

To summarize, the dual strategy of simultaneous development of the market and member farmers has resulted in parallel growth of demand and supply at a steady pace and in turn assured the growth of the industry over an extended period of time.

Cost Leadership: AMUL’s objective of providing a value proposition to a large customer base led naturally to a choice of cost leadership position. Given the low purchasing power of the Indian consumer and the marginal discretionary spending power, the only viable option for AMUL was to price its products as low as possible.

Focus on Core Activities: In view of its small beginnings and limited resources, it became clear fairly early that AMUL would not be in a position to be an integrated player from milk production to delivery to the consumer23. Accordingly, it chose a strategy to focus on core dairy activities and rely on third parties for other complementary needs. This philosophy is reflected in almost all phases of AMUL network spanning R&D, production, collection, processing, marketing, distribution, retailing etc. For example, AMUL focused on processing of liquid milk and conversion to variety of dairy products and associated research and

development. On the other hand, logistics of milk collection and distribution of products to customers was managed through third parties.

Managing Third Party Service Providers: Well before the ideas of core competence and the role of third parties in managing the supply chain were recognized and became fashionable, these concepts were practiced by GCMMF and AMUL. From the beginning, it was recognized that the core activity for the Unions lay in processing of milk and production of dairy products. Accordingly, the Unions focused efforts on these activities and related technology development. Marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third party service providers.

These include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, some veterinary services etc. It is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed. Hence, while third parties perform the activities, the Unions and GCMMF have developed a number of mechanisms to retain control and assure quality and timely deliveries (see the sub-section on Coordination for Competitiveness later in the paper for more details). This is particularly critical for a perishable product such as liquid milk.

Financial Strategy: AMUL’s finance strategy is driven primarily by its desire to be self-reliant and thus depend on internally generated resources for funding its growth and development. This choice was motivated by the relatively underdeveloped financial markets with limited access to funds, and the reluctance to depend on Government support and thus be obliged to cede control to bureaucracy. AMUL’s financial strategy may thus be characterized by two elements: (a) retention of surplus to fund growth and development, and (b) limited/ no credit, i.e., all transactions are essentially cash only. For example, payment for milk procured by village societies is in cash and within 12 hours of procurement (most, however, pay at the same time as the receipt of milk). Similarly, no dispatches of finished products are made without advance payment from distributors etc. This was particularly important, given the limited liquidity position of farmer/suppliers and the absence of banking facilities in rural India. This strategy strongly helped AMUL implement its own vision of growth and development. It is important

to mention that many of the above approaches were at variance with industry practices of both domestic and MNC competitors of AMUL.

Organization:

AMUL is organized as a cooperative of cooperatives (i.e., each village society, a cooperative in itself, is a member of the AMUL cooperative) thereby deriving the advantage of scale and uniformity in decision making. The founders of Kaira Union realized that to fulfill their objectives, a large number of marginal farmers had to benefit from the cooperative – a network of stakeholders had to be built. And once built, it had to grow so as to draw more rural poor to undertake dairy farming as a means of livelihood. The network had to have several layers – the organizational network where the voice of the owners governed all decisions, a physical network of support services and product delivery process and a network of small farmers that could deliver the benefit of a large corporation in the market place. More importantly, a process had to be put in place to build these networks.

Building an organizational network that would represent the farmers and the customers was the most complicated task. A loose confederation was developed with GCMMF representing the voice of the customers, the Unions representing the milk processors and the village societies representing the farmers. Competition in the markets ensured that the entire network was responding to the requirements of the customers at prices that were very competitive. The task of ensuring that returns to the farmers was commensurate with the objectives with which the cooperatives were setup was achieved through representation of farmers at different levels of decision making throughout the network – the board of directors of societies, Unions and the Federation comprised farmers themselves. In order to ensure that most returns from sales went to the producers, the intermediaries had to operate very effectively and on razor thin margins. This turned out to be a blessing in disguise – the operations remained very “lean” and started to provide cost based advantage to the entire network.

AMUL established a group to standardize the process of organizing farmers into village societies. In addition to establishing the criteria for selecting

members, the group had to train the VS to run the cooperative democratically, profitably and with concern for its members.

This included establishing procedures for milk collection, testing, payment for milk purchased from member farmers and its subsequent sale to the union, accounting, ensuring timely collection and dispatch of milk on milk routes established by the union, etc.

The Village Societies Division at AMUL acts as the internal representative of village societies in their dealings with the Union. Cooperative development programmes at the village level for educating & training its members have become an important part of the strategy to build this extensive network.

Milk procurement activity at AMUL comprises development and servicing of village societies, increasing milk collection, procurement of milk from societies & its transport to the chilling locations, and resolving problems of farmers and village societies. Their stated objective is to ensure that producers get maximum benefits. The Village Societies Division coordinates these activities. Milk collection takes place over a large number of pre-defined routes according to a precise timetable. The field staff of this division also helps village societies interface with the Union on various issues ranging from improvement of collection, resolving disputes, repair of equipments to obtaining financing for purchase of equipment etc. In addition, they are also responsible for the formation of new societies, which is an important activity at AMUL.

Marketing:

GCMMF is the marketing arm of the network and manages the physical delivery and distribution of milk and dairy products from all the Unions to customers. GCMMF is also responsible for all decisions related to market development and customer management. These activities, which range from long-term planning to medium-term and short-term operational decisions are described below.

As mentioned earlier, introduction of new products and choice of product mix and markets should be consistent with the growth strategy, and synchronous with growth in milk supply. GCMMF’s demand growth strategy may be characterized by two key elements: (i) developing markets for its high value products by graduating customer segments from low value products, and (ii) maintaining a healthy level of customer base for its base products (low value segment). This strategy often requires GCMMF to allocate sufficient quantity of milk supply to low value products, thereby sacrificing additional profits that could be generated by converting the same to high value products.

For example, liquid milk as well as various milk products produced by different Unions are sold under the same brand name of AMUL. Interestingly, the advertising has centered on building a common identity (e.g., a happy & healthy “cartoon” AMUL girl) and evoking national emotion (e.g., the key advertising slogan says “AMUL - The Taste of India”).

Operations:

As mentioned earlier, the strategy, design and practices in AMUL’s network are strongly driven by the objective of establishing and operating an efficient supply chain from milk production and procurement to product delivery to customers. Management of this network is built around two key elements – (a) coordination of the diverse elements of the network and (b) use of appropriate technology that includes product, process and information technology and managerial practices and systems. In what follows, we describe various features of these elements that have contributed to the evolution of an efficient supply chain.

Coordination for Competitiveness:

Robust coordination is one of the key reasons for the success of operations involving such an extensive network of producers and distributors at GCMMF. Some interesting mechanisms exist for coordinating the supply chain at GCMMF. These range from ensuring fair share allocation of benefits to various stakeholders in the chain to coordinated planning of production and distribution. More importantly, the reason for setting up of this cooperative is not amiss to any one in this large network organization. Employees, third part service providers, and distributors are constantly

reminded that they work for the farmers and the entire network strives to provide the best returns to the farmers, the real owners of the cooperative.

Technology for Effectiveness:

Service to customers required the following: better and newer “products”, “processes” that would deliver the low cost advantage to the network and “practices” that would ensure high productivity and delivery of the right product at the right time. Thus technology or knowledge that was embodied in products, processes, and practices became an important factor in delivering effectiveness to the network of cooperatives. One distinguishing feature of AMUL (in comparison with other similar cooperatives globally) is the large variety in their product mix. Producing them not only requires diverse skills but also knowledge of different types of processes. AMUL dairy led the way in developing many of these products and establishing the processes for other member Unions.

Equally impressive are the achievements on process technology. While several continuous innovations to equipment and processes have been done at AMUL, the most significant one has been the development of processes for using buffalo milk to produce a variety of end products. Gujarat (and most of India) is a buffalo predominant area. As more farmers joined the cooperatives, the need to develop a mechanism for storage of increasing quantities of milk became intense. Moreover, the cooperative was established on the promise that it would buy any quantity of milk that a member farmer wanted to sell. The need to store milk in powder form increases as excess milk quantities in winter seasons could then be used in lean summer seasons. Moreover, demand for liquid milk was not growing along with growth in milk production. No technology, however, existed worldwide to produce powder from buffalo milk. Engineers at AMUL successfully developed a commercially viable process for the same – first time in the history of global diary industry. Subsequently, it also developed a process for making baby food out of this milk powder. It has also developed a unique process for making good quality cheese out of buffalo milk thereby converting a perceived liability into a source of comparative advantage – the

task was done through process technology research. Most of its plants are state of art and automated. Similar efforts in the area of “embryo transfer technology” have helped create a high yield breed of cattle in the country. AMUL’s innovations in the areas of energy conservation and recovery have also contributed to reduction in cost of its operations. AMUL also indigenously developed a low cost process for providing long shelf life to many of its perishable products.

Growth and Challenges:

AMUL’s growth during the past five decades has been fuelled primarily by growth in milk supply with corresponding pricing strategy to generate demand. This growth has been sustained by a two-pronged strategy – (a) growth in the number of member farmers by widening its coverage with more village societies and increasing the membership in each society, and (b) growth in per capita milk supply from its members. This growth is achieved by increasing milk yields and by helping members raise their investments in cattle. It is worth noting that AMUL has funded these support activities from its earnings (instead of repatriating them to the members either as dividends or with a higher procurement price). It is expected that AMUL’s growth in the immediate future will continue to rely on this strategy. However, in the new emerging environment, several challenges have become apparent and AMUL network needs to evolve proactive mechanisms to counter these threats.

First, competitors are cutting into milk supply by offering marginally higher procurement prices thereby challenging the practice of provision of services for long-term growth in lieu of higher prices in the short-term.

Second, for a section of its membership, dairy activity is a stepping-stone for upward mobility in the society. Typically, such members move on to other occupations after raising their economic position through milk production. As a result, AMUL is unable to realize the full benefits of its long-term strategy, and finds new members (mostly marginal farmers) to replace those who have higher potential and capacity.

By progressively increasing the share of higher value products AMUL has been able to grow at a faster rate than the growth in milk supply.

A part of AMUL’s growth has come from diversification into other agri-products such as Vegetable oils, instant foods etc. In some of these initiatives AMUL adapted its successful Cooperative organization structure, but the experience to date has been somewhat mixed. More recently, the network is exploring conventional joint venture arrangements with suitable partners for diversification into areas such as fast food and speciality chocolates. While it is too early to assess the success of these ventures, challenges involved are becoming quite visible.

For example, diversification has resulted in expansion of the network with disparate elements, each motivated by their own objectives. This in turn has led to a lack of focus within the network and dilution in the commonality of purpose. These developments are likely to have serious implications for coordination and control in the network. More important, shared vision and common goal was one of the main planks of AMUL’s growth during the past 50 years, and its dilution is likely to adversely impact the network performance.

GCMMF: An Overview

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat 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.

Members: 13 district cooperative milk producers' Union

No. of Producer Members: 2.6 millionNo. of Village Societies: 12,792Total Milk handling capacity: 10.16 million liters per dayMilk collection (Total - 2006-07): 2.38 billion litersMilk collection (Daily Average 2006-07): 6.5 million litersMilk Drying Capacity: 594 metric Tons per dayCattle feed manufacturing Capacity: 2640 Mts per day

Sales Turnover Rs (million) US $(in million) 1994 - 95 11140 355 1995 - 96 13790 400 1996 - 97 15540 450 1997 - 98 18840 455 1998 - 99 22192 493 1999 - 00 22185 493 2000 - 01 22588 500 2001 - 02 23365 500 2002 - 03 27457 575 2003 - 04 28941 616

2004 - 05 29225 672 2005 - 06 37736 850 2006 - 07 42778 1050

OBJECTIVE:-

To Study and analyses the Amul’s success and Find out the strategy adopted by the company to make its brand popular among customers.

PRODUCT RANGE

AMUL FRESH MILK

Composition:

Variety FAT SNF (%) (%)

Amul Gold (whole milk) 6 9

Amul shakti (standardized milk) 4.5 8.5

Amul tazza (toned milk) 3 8.5

Amul lite (double toned milk) 1.5 8.5

Every 100 parts of SNF (solids not fat) contains 56 part of carbohydrates, 34 parts of protein and 9 parts of mineral.

Special features: Amul milk is the most hygienic liquid milk available in market. It is pasteurized in state-of-the-art processing plants and pouch-packed to make it conveniently available to consumers.

Product specification:

Amul milk meets the PFA standards for the respective type of milkAmul Gold

Amul Gold is Long Life standardized milk. It is fresh and only fresh milk,Which has been processed with a technology called UHT (ultra high temperature), hence also known as UHT milk. Notwithstanding popular misconception, UHT technology does not involve any use of preservatives. The UHT treatment ensures zero microbial activation, while preserving the maximum flavor, taste and nutritional value. The aspect packaging system protects the product from air and light and guarantees a long shelf life of 180 days without refrigeration.

Amul Gold contains 4.5% fat and 8.5% SNF minimum and is ideal for making sweet dishes (like kheer, payasam etc.) and for setting curds. It is also ideal for drinking straight from the pack for kids and adolescents who simply love its creamy taste sans the inconvenient cream layer! Amul Gold comes in convenient 1 liter and 500ml and new 220ml packs.

Amul Taaza Double Toned Milk

Amul Taaza is Long Life double toned milk. It is fresh and only fresh milk,Which has been processed with a technology called UHT (ultra high temperature), hence also known as UHT milk. Notwithstanding popular misconception, UHT technology does not involve any use of preservatives. The UHT treatment ensures zero microbial activation, while preserving the maximum flavor, taste and nutritional value. The aspect packaging system protects the product from air and light and guarantees a long shelf life of 180 days without refrigeration.

Amul Taaza contains 1.5% and 9%SNF minimum and is ideal for tea and coffee whitening and for setting curds. It is also just right for drinking straight from the pack for those who would like to enjoy the taste the

goodness of natural while avoiding the hazards of too much fat! Amul Taaza comes in convenient 1 liter, 500ml and 200ml pack.

Amul Lite Slim and Trim Milk

Amul Lite is long life skimmed milk. It is fresh and only fresh milk,Which has been processed with a technology called UHT (ultra high temperature), hence also known as UHT milk. Notwithstanding popular misconception, UHT technology does not involve any use of preservatives. The UHT treatment ensures zero microbial activation, while preserving the maximum flavor, taste and nutritional value. The aspect packaging system protects the product from air and light and guarantees a long shelf life of 180 days without refrigeration.

Amul Lite Milk is a unique offering to health conscious milk lovers. With virtually 0% fat contents, nil cholesterol and 8.7% SNF minimum, it gives you all the proteins, vitamins and minerals of natural milk without your having to imbibe unnecessary flab in the deal ! Amul Lite Milk comes in convenient 1 liter, 500ml and 200ml packs.

Amul Shakti Toned Milk

Amul Shakti is Long Life toned milk. . It is fresh and only fresh milk,Which has been processed with a technology called UHT (ultra high temperature), hence also known as UHT milk. Notwithstanding popular misconception, UHT technology does not involve any use of preservatives. The UHT treatment ensures zero microbial activation, while preserving the maximum flavor, taste and nutritional value. The aspect packaging system protects the product from air and light and guarantees a long shelf life of 180 days without refrigeration.

Amul Shakti contains 3% fat and 8.5% SNF minimum. It is ideal multipurpose milk. Growing children love its taste while benefiting from its comprehensive nutrition. Amul Shakti comes in convenient 1 liter and 500ml packs.

Large range of Products:

Bread spreads:

Amul Butter Amul Lite Low Fat Bread spread Amul Cooking Butter

Cheese Range:

Amul Pasteurized Processed Cheddar Cheese Amul Processed Cheese Spread Amul Pizza (Mozzarella) Cheese Amul Shredded Pizza Cheese Amul Emmental Cheese Amul Gouda Cheese Amul Malai Paneer (cottage cheese) Frozen and Tinned Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom) Amul Amrakhand Amul Mithaee Gulabjamuns Amul Mithaee Gulabjamun Mix Amul Mithaee Kulfi Mix

UHT Milk Range:

Amul Taaza 3% fat Milk Amul Gold 4.5% fat Milk Amul Slim-n-Trim 0% fat milk Amul Chocolate Milk Amul Fresh Cream

Amul Snowcap Softy Mix Amul Taaza Double Toned Milk

Pure Ghee:

Amul Pure Ghee Sagar Pure Ghee Amul Cow Ghee

Infant Milk Range:

Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amulspray Infant Milk Food

Milk Powders:

Amul Full Cream Milk Powder Amulya Dairy Whitener Sagar Skimmed Milk Powder Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fat Amul Gold Full Cream Milk 6% fat Amul Shakti Standardized Milk 3% fat Amul Smart Double Toned Milk 1.5% fat

Curd Products:

Amul Masti Dahi (fresh curd) Amul Butter Milk Amul Lassee

Amul Icecreams:

Royal Treat Range (Rajbhog, Cappuchino, Choco chips, Butterscotch, Tutti Frutti)

Nut-o-Mania Range (Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar Carnival, Badshahi Badam Kulfi, Shista Pista Kulfi)

Utsav Range (Anjir, Roasted Almond) Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose,

Chocolate) Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh

Strawberry, Black Currant) Sundae Range (Mango, Black Currant, Chocolate, Strawberry) Millennium Icecream (Cheese with Almonds, Dates with Honey) Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam

Kulfi, Shahi Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi) Cool Candies (Orange, Mango) Cassatta Tricone Cones (Butterscotch, Chocolate) Megabite Almond Cone Frostik - 3 layer chocolate Bar Fundoo Range - exclusively for kids SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango,

Pineapple) Health : Isabcool

Chocolate & Confectionery:

Amul Milk Chocolate Amul Fruit & Nut Chocolate Amul Eclairs

Brown Beverage:

Nutramul Malted Milk Food

Milk Drink:

Amul Shakti Flavored Milk Amul kool flavored milk (Mango, Rose, Chocolate, Strawberry)

Ready to Serve Soups:

Masti Tomato Soup Masti Hot & Sour Soup

Health Beverage:

• Amul Shakti white milk food

COMPANY BACKGROUND

According to chairman’s speech Gujarat cooperative Milk Marketing federation ltd (GCMMF) is Asia’s largest integrated dairy products manufacturing and marketing organization and India’s largest food company, having annual turnover more than 3,773 crores. This is a testimony to the collective wisdom of 24 lac milk producers of Gujarat who have built a premier cooperative organization and much value brands ‘Amul’ and ‘Sugar’ with; perseverance over the last 50 years.

The story of Amul (Anand Milk Union Limited) began way back in 1946 as an offshoot of the freedom movement with an aim to do away with the exploitation of middlemen in milk collection and give the villagers the best returns for milk. Amul began the dairy cooperative movement in India and formed an apex cooperative organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which is jointly owned by some 2.2 million milk producers in Gujarat, INDIA. Now, not only had the milk collection and the number of co-operative members increased but Amul was giving a stiff challenge to the multinationals. Consider this: Amul was a leader in baby food, dairy whiteners, chess and ice creams. It held an 86% market share in butter. Exports of milk and milk products were Rs.80 crore p.a. This was certainly a giant leap when one considered that in 1946 when it began, it had only two village societies and a collection of 247 liter of milk daily. The primary goal of Dr. v. Kurien, chairman GCMMF, the ‘Milkman of India’, had been to build a strong Indian society through an innovative cooperative network, to provide quality service and products to end-consumer and good returns to the farmer members. Kurien averred, “We have traversed a path that few have dared to. We are continuing on a path that still fewer have the courage to follow. We must pursue a path that even fewer can dream of pursuing. Yet, we must we hold in trust the aims and aspirations of millions of our countrymen.”

During 2001-02, GCMMF’s member unions put together procured 45.87 lakh liters of milk per day (LLPD), with the leading contributor being Mehsana (11.15 LLPD), Karia at (6.88 LLPD), followed by Banaskantha (6.86 LLPD), Sabarkantha (6.18 LLPD), Surat (5.29 LLPD), Baroda (2.44 LLPD), Panchmahal (2.01 LLPD), Valsad (1.83 LLPD), Ahmedabad (1.15 LLPD), Gandhi nagar (1.05 LLPD), Rajkot (0.81 LLPD), and Bharuch (0.24LLPD).

In addition to well-thought out cooperative movement, information technology (IT) had played significant role in developing the Amul Brand. The logistics behind coordinating the collection of some 6 million litres of milk per day from 10,755 separate village cooperative societies throughout Gujarat and then storing, processing and producing milk products at the respective 12 District Dairy Union, were awesome. The installation of 3000 Automatic Milk Collection System Units (AMCUS) at village societies to capture member information, milk fat content, the volume collected and amount payable to each member proved invaluable in ensuring fairness and transparency throughout the whole organization. Cooperative Milk Marketing Federation (GCMMF) is farmer’s cooperative in Indian marketing the dairy products of milk cooperatives in the state of Gujarat. It has been a successful enterprise, and its flagship brand Amul has become one of the best recognized brand names in India. Due to supply side difficulties thanks to the growth rate in milk procurement hitting a plateau, and intensified competition in the dairy products, GCMMF is considering diversification into processed foods such as a juices, jams, and sauces, possibly leveraging its name and brand image.

Competitive Pricing GCMMF can procure milk at lower prices as compared to competitors; Amul has launched a substantial price discount to main competitors. This has helped in attaining a good volume grown in a short time span.

Brand Awareness is High

The Amul brand has a strong equity in milk products and GCMMF has managed to leverage on this brand equity and attained over 20% market share in Mumbai within a year of its launch.

Established Distribution Network

GCMMF already has a wide retail distribution network, which market its other milk products such as cheese and butter. Hence distribution reach the single most important factor in creating a critical mass is already available. Distribution expansion in emerging markets of Small Towns continued to be a major initiative of our Federation during this year. Almost 500 new Distributors were inducted as Channel partner—mostly in Small towns. At the same time, to cope up with the fast emergence of organized Retail in India, suitable Distribution model was developed during the year for servicing Modern format stores. Along with the changes in ‘consumption occasions’, distribution was expanded to Highways, Railways, Airports, Bus Stations, Schools, Colleges, Industrial Canteens etc. Our Amul Yatra Program ensures that our Distributors visit Anand, thereby, imbibing an appreciation of cooperative philosophy and culture as well as operational systems and processes. Top retailers of the Country also participate in Amul Yatra. So far, 2779 Distributors, 1654 salesman, and 1490 top retailers have participated in Amul Yatra. During this year of 80 key decision makers of top Modern format stores from various Metros have also participated. The company has gone national during FY01 with setting up proper infrastructure facilities of cold storage for eastern markets. It has also tied up with various regional dairy cooperative like Mother Dairy (DELHI) for northern market, Mother Dairy (BANGLORE) for the southern market; and the Patna Dairy Project for increasing its reach. The company presently is said to be in talk with cooperative Dairies in Ujjain and Lucknow for its operations in northern and eastern market. The company also launched a number of flavours during the year and response to HLL’s Max it launched its Fundoo range of ice creams in price category of Rs 1 onwards.

SALES

During the year, sales of our Federation registered a growth of 29% to reach Rs. 3773.55 crores (Rs. 37.74 billion) including consignment sales of Rs. 39.42 crores (Rs. 0.39 billion). This is a very robust growth rate shown by our Federation vis-à-vis the industry average. I am pleased to note that our federation has done remarkably well in most of the value added consumer packs. Sales of Amul Milk in pouches increased by 31%. UHT Milk has grown in value terms by 12% with 60% market share. Amul Ice cream achieved a sales value growth of 18%, and has strengthened its position as the undisputed market leaders with 35% market share. Sales of Masti Dahi grew by 25%. The sales of the Amul Cheese range is increased by 18%. Products like Amul Masti Spiced Buttermilk, Flavoured Milk, Amul Fresh Ice cream, Paneer and Mithaimate demonstrated their potential to become dominant brands in the coming few years. New products like Amul Basundi, Stamina, Yogi Flavoured Yoghurt, Kool Café etc. launched during the year are expected to do well in the current year while diversifying our portfolio of offerings the consumer further.

VALUE-ADDED PRODUCTS:

Amul had humble, yet solid beginnings. From milk alone, the portfolio had expanded to include some very marketing-intensive products. Amul commissioned IMRB to do a study on what products the customers expected from its stable. Butter and ghee were the old success stories. Flavored mild under the brand name ‘Kool’ has also been accepted as a success story. Over time, Amul expects to collect sufficient data to validate the same. Says R S Sodhi, “We have been trying to figure out how we can dispose of the milk procured. Its 52 lakh liters a day, so how does one maximize returns on it? Hence the foray into value-added products.” Amul outlined its advantages as follows:

1. Cost-effective production, including primarily, procurement of milk from over two million dairy farmers, which in turn, assures poor farmers reasonable prices.

2. Climbing up in the value-chain by diversifying in value-added products, such as milk sweets, ice creams, pizzas, confectioneries, truly as a food company, rather than merely selling milk, to be known only as an organized milk-vendor.

3. Sustained building of loyalty of customers, not by promoting individual products, but all products under the umbrella of its premium brand, Amul, by investing a good 40 per cent of its ad budget towards brand promotion.

4. Facilitating reach to customers throughout the country by a strong chain of distribution outlets (Amul reached out to five lakh retail outlets and had 2,600 distributors under its fold, and a well-established cold chain). The investment in relationship with business partners: both farmer-based co-operatives and distribution networks for purchasing and selling functions respectively, enables Amul enter into any food category without much time or investment.

The key categories were chocolates, ice creams, soups and retail initiatives.

1. CHOCOLATES:

GCMMF, which had been lying low for a while with its generic chocolate variants such as Fruit & Nut and Milk, intended segmenting its chocolates, catering to different age groups and categories that were likely to consume its brand. Sanjay K. Panigrahi, General Manager, GCMMF, said, “We intended to take advantage of our already existing cold chain to get more active in the growing market of molded chocolates and confectionery.” Having launched an occasion-related sub-brand of Nuts ‘bout U on the eve of Valentine’s Day and Kite Bite for the kite flying festival in Ahmedabad, Amul decided to segment the market with brands catering to the `impulse’ and `teen’ segments, as well as having brands catering to different occasions.

2. ICE-CREAMS:

For its ice-cream and milk business, GCMMF had invested in increasing its milk capacity. It firmed up plans to invest Rs 100-120 crore to expand this from 1.1 million liters a day to 1.8 million liter a day at its Gandhinagar factory. The cooperative also planned to expand its production facilities beyond Gujarat to service other regions in India. GCMMF bought an ice-cream manufacturing unit in Nagpur and installed a dairy unit alongside. Through this unit, Amul extended its milk supply to over 10 cities spread over Rajasthan, Madhya Pradesh and Maharashtra.

Amul also focused on its supply system. Efforts were on to ensure greater availability of Amul ice-cream at pushcarts and small outlets. The company felt that availability was the most important factor in ice cream sales. Thus, Amul ice-cream could be found in ‘just around the corner shops,’ local STD booths, local kirana shops, chemists and bakers, who stocked the ice-cream in deep freezers.

Both Amul and Hindustan Lever’s (HLL) Kwality Walls claimed to be the largest selling ice-cream brands in India. While HLL quoted a market research study by AC Nielson, which put Kwality Walls at the No 1 spot, an independent study by Ahmedabad-based Consumer Education and Research Society (CERS) ranked Amul as No 1, followed by Kwality Walls (among four brands including Vadilal and four loose samples) on various parameters of taste, melting quality, weight, fat and sugar content.Amul ice-cream was positioned as ‘real ice-cream’ made from real milk cream, while HLL’s Kwality Walls was made from vegetable oil and its items were dubbed Frozen Deserts. There was also stiff competition from the other cooperative, NDDB in the form of Mother Dairy Ice Creams. Amul sold its Ice Cream in New Delhi, India’s biggest Ice Cream market, where its anti-compete agreement with Mother Dairy had expired. Amul had been sourcing its entire Ice Cream requirement for the northern market (including Delhi) from its Gandhinagar plant.

3. SOUPS:

Amul introduced ready-to-use (just pour and heat) soups branded ‘Masti’ in tetra packs of one liter. To begin with they were introduced in two flavors - Hot ‘n’ Sour and Tomato. Said Sodhi, “It was a test marketing drive in Gujarat and in a month or two it would be introduced all over India.” And there wasn’t much competition for there were not many companies in India that sold ready-to-use soups.

Sodhi added, “Soup is a milk product and that’s a secret. You will come to know only when you consume it.” Keeping the ingredients a closely guarded secret, the company stated that one of the reasons to launch soups was to utilize the already installed equipment for tetra packaging.

4. RETAILING:

The retailing initiative included not only milk booths, but also restaurants. Amul had also taken the initiative to set up 100 of its own brand retail parlors under the name ‘Utterly Delicious’, an initiative which would give it a retail edge, compared to its competitors such as HLL and Cadbury. Panigrahi estimated Rs. 100 crore in turnover in the three years after launching the `Utterly Delicious’ parlors. As an extension of this retail initiative, Amul also test-launched a restaurant chain under the Utterly Delicious brand at Vashi in Navi Mumbai. Amul wanted to open more of such eateries in Mumbai soon, which would dish out ready-to-eat stuff like parathas, lassi, buttermilk, sandwiches and pizzas, using ingredients from Amul and also vending the products already available under the Amul franchise like soups, butter, ghee etc;

Utterly, Butterly, Delicious Story

“The moppet who put Amul on India's breakfast table”

50 years after it was first launched, Amul's sale figures have jumped from 1000 tonnes a year in 1966 to over 25,000 tonnes a year in 1997. No other brand comes even close to it. All because a thumb-sized girl climbed on to the hoardings and put a spell on the masses.

Story:

It was Bombay, summer of 1967. A Charni Road flat. Mrs. Sheela Mane, a 28-year-old housewife is out in the balcony drying clothes. From her second floor flat she can see her neighbours on the road. There are other people too. The crowd seems to be growing larger by the minute. Unable to curb her curiosity Sheela Mane hurries down to see what all the commotion is about. She expects the worst but can see no signs of an accident. It is her four-year-old who draws her attention to the hoarding that has come up overnight. "It was the first Amul hoarding that was put up in Mumbai," recalls Sheela Mane. "People loved it. I remember it was our favourite topic of discussion for the next one week! Everywhere we went somehow or the other the campaign always seemed to crop up in our conversation."

Call her the Friday to Friday star. Round eyed, chubby cheeked, winking at you, from strategically placed hoardings at many traffic lights. She is the Amul moppet everyone loves to love (including prickly votaries of the Shiv Sena and BJP). How often have we stopped, looked, chuckled at the Amul hoarding that casts her sometime as the coy, shy Madhuri, a bold sensuous Urmila or simply as herself, dressed in her little polka dotted dress and a red and white bow, holding out her favourite packet of butter.

For 30 odd years the Utterly Butterly girl has managed to keep her fan following intact. So much so that the ads are now ready to enter the Guinness Book of World Records for being the longest running campaign ever. The ultimate compliment to the butter came when a British company launched butter and called it Utterly Butterly, last year.

“The Man behind the Success”

It all began in 1966 when Sylvester DaCunha, then the managing director of the advertising agency, ASP, clinched the account for Amul butter. The butter, which had been launched in 1945, had a staid, boring image, primarily because the earlier advertising agency which was in charge of the account preferred to stick to routine, corporate ads.

One of the first Amul hoardings

In India, food was something one couldn't afford to fool around with. It had been taken too seriously, for too long. Sylvester daCunha decided it was time for a change of image.

The year Sylvester daCunha took over the account, the country saw the birth of a campaign whose charm has endured fickle public opinion, gimmickry and all else.

The Amul girl who lends herself so completely to Amul butter, created as a rival to the Polson butter girl. This one was sexy, village belle, clothed in a tantalising choli all but covering her upper regions. "Eustace Fernandez (the art director) and I decided that we needed a girl who would worm her way into a housewife's heart. And who better than a little girl?" says Sylvester daCunha. And so it came about that the famous Amul Moppet was born.

That October, lamp kiosks and the bus sites of the city were splashed with the moppet on a horse. The baseline simply said, Thoroughbread, Utterly Butterly Delicious Amul,. It was a matter of just a few hours before the daCunha office was ringing with calls. Not just adults, even children were calling up to say how much they had liked the ads. "The response was

phenomenal," recalls Sylvester daCunha. "We knew our campaign was going to be successful."

The Rebecca Mark favourite

For the first one year the ads made statements of some kind or the other but they had not yet acquired the topical tone. In 1967, Sylvester decided that giving the ads a solid concept would give them extra mileage, more dum, so to say. It was a decision that would stand the daCunhas in good stead in the years to come.

In 1969, when the city first saw the beginning of the Hare Rama Hare Krishna movement, Sylvester daCunha, Mohammad Khan and Usha Bandarkar, then the creative team working on the Amul account came up with a clincher -- 'Hurry Amul, Hurry Hurry'. Bombay reacted to the ad with a fervour that was almost as devout as the Iskon fever.

That was the first of the many topical ads that were in the offing. From then on Amul began playing the role of a social observer. Over the years the campaign acquired that all important Amul touch.

India looked forward to Amul's evocative humour. If the Naxalite movement was the happening thing in Calcutta, Amul would be up there on the hoardings saying, "Bread without Amul Butter, cholbe na cholbe na (won't do, won't do). If there was an Indian Airlines strike Amul would be there again saying, Indian Airlines Won't Fly Without Amul.

There are stories about the butter that people like to relate over cups of tea. "For over 10 years I have been collecting Amul ads. I especially like the ads on the backs of the butter packets, "says Mrs. Sumona Varma. What does she do with these ads? "I have made an album of them to amuse my grandchildren," she laughs. "They are almost part of our culture, aren't they? My grandchildren are already beginning to realise that these ads are not just

a source of amusement. They make them aware of what is happening around them."

Despite some of the negative reactions that the ads have got, DaCunhas have made it a policy not to play it safe. There are numerous ads that are risque in tone.

"We had the option of being sweet and playing it safe, or making an impact. A fine balance had to be struck. We have a campaign that is strong enough to make a statement. I didn't want the hoardings to be pleasant or tame. They have to say something," says Rahul daCunha.

"We ran a couple of ads that created quite a furore," says Sylvester daCunha. "The Indian Airlines one really angered the authorities. They said if they didn't take down the ads they would stop supplying Amul butter on the plane. So ultimately we discontinued the ad," he says laughing. Then there was the time when the Amul girl was shown wearing the Gandhi cap. The high command came down heavy on that one. The Gandhi cap was a symbol of independence; they couldn't have anyone not taking that seriously. So despite their reluctance the hoardings were wiped clean. "Then there was an ad during the Ganpati festival which said, Ganpati Bappa More Ghya (Ganpati Bappa take more). The Shiv Sena people said that if we didn't do something about removing the ad they would come and destroy our office. It is surprising how vigilant the political forces are in this country. Even when the Enron ads (Enr on or off) were running, Rebecca Mark wrote to us saying how much she liked them."

Amul's point of view on the MR coffee controversy

There were other instances too. Heroine Addiction, Amul's little joke on Hussain had the artist ringing the daCunhas up to request them for a blow up of the ad. "He said that he had seen the hoarding while passing through a small district in UP. He said he had asked his assistant to take a photograph of himself with the ad because he had found it so funny," says Rahul daCunha in amused tones. Indians do have a sense of humour, after all.

From the Sixties to the Nineties, the Amul ads have come a long way. While most people agree that the Amul ads were at their peak in the Eighties they still maintain that the Amul ads continue to tease laughter out of them.

Where does Amul's magic actually lie? Many believe that the charm lies in the catchy lines. That we laugh because the humour is what anybody would enjoy. They don't pander to your nationality or certain sentiments. It is pure and simple, everyday fun.

Amul Girl: A Classic Ad

SHE RARELY, if it all talks about butter. She celebrates and laughs at Sports, Politics, International affairs, Celebrities and Bollywood armed with a golden yellow slice of bread and hopes the message gets across.

Butter was Amul’s second product after milk and the challenge to now non-existent Polson in the 1950s. Today 22 percent of India’s population consumes the Creamy, Delicious, Sinful spread we call table butter, yet no other brand has managed even a foothold in the market. At best even the multinationals like Nestle, Le Bon or Locals like Britannia and Verka have managed amere two to three percent at best.

According to RS Sodhi, general manager, Dairy Line, Amul has an almost monopolistic 86 percent of the Rs. 600 crore butter market in India. It is the only truly national brand. What gives Amul butter this spread?

She is the quintessential girl. Yet, she was just a twinkle in Chairman Dr. Verghese Kurien’s eye, in a story that goes back 60 years to the Kaira Co-operative where the Gujarat Co-opearative movement started. The Amul brand name was coined by Kurien, to stand for Anand Milk Union Ltd. It also turned out that the name meant ‘priceless’ in Sanskrit. While Indian homes had Amul product since 1946, the name became a brand only in 1955 and the first “Utterly Butterly Delicious”- Amul hoarding went up in 1966, when the brand was handled by Advertising and Sales Promotion (ASP).

Mr. Eustace Fernandes, then art director at ASP, drew up the butter girl. She was an Orange-Faced, Winking, Blue Cherubic Girl, Wearing a Polka-Dotted Dress; one knee bent and teasing us with her perfectly sliced buttered golden bread. The team then consisted of K. Kurian Group Head

then at ASP, not to be confused with Amul’s Dr. Kurien), Mike Khanna, Sylvester da Cunha and Fernandes.

Amul ad has so deep impressin on customers mind that if company puts a blank hoarding with just Amul, or ‘Utterly Butterly’ up there, people will think of Amul butter.

Mr. Rahul da Cunha said (Director, da Cunha Communications and son of Sylvester da Cunha) “It’s the greatest gift my Dad’s ever given me”. The pressure is immense every Monday morning. We have 85 national topicals a year not including the ones that are local specific.

The hoardings focus on urban people. Company appeal to them through the cheapest form of advertising. Perhaps three out of 10 hoardings won’t be understood by everyone. Earlier when establishing the brand the headline and the baseline had to be Amul. Today again, only third of them really plug the product.

Sylvester da Cunha takes a strong point of view. “Despite what any of the others may have said, butter is an elite product,” he says it is not a rural product. You have to follow the cold chain. In some parts of India, they would rather use ghee than butter. So, it is not a Janata Product. So in that sense the hoardings cannot be Janata, they have to be elitist, because it is an elitist product. “He goes on explain, “Within the butter market Amul is the undisputed leader. Have the hoardings built the strength of the brand? I would say possibly so. ONE, top of mind awareness is what the hoardings give to customer. TWO is the topicality- it involves the beholder. THREE, it is the humour which wins over the consumer’s Heart. FOUR, it is the taste. Research shows that once AMUL eater is always an AMUL eater.

Its fact that the Moppet works better than any of the vogue celebrity based campaign. She’s far cheaper than celebrities and better than any of them; in fact, when the occasion demands it, without any starry tantrums, she gives up her polka-dotted frock to don their coats. “Celebrities are a waste of money! The greatest icons ever created are the Amul Butter Girl and the Air-India Maharaja,”

Last year’s domestic consumption of butter in India was over 45,000 tonnes. Amul butter has posted 19 percent growth in sales in FY04. In addition to the regular salted Yellow Butter, varities include Amul Lite low fat spread, Amul Cooking Butter and the most recent launch, Amul White Butter. The figures are huge and growing. Amul is the da Cunha’s oldest Brand and holds pride of place in the agency.

The advertising budget of GCMMF is very tiny. May be most of people wouldn’t believe it. It’s probably 0.01 percent of the sales. It’s infinitesimal.

(Source: USP AGE, August 2004)

The da Cunhas advertising agency handle 18 brands for the Amul co-operative, including Cheese, Dahi, Kool milk and a new range of soups. Dairy brand need to diversify, because they can’t just get by with Milk. You can’t grow because the cattle population in India is Static- we’ll have to displace food crops {to sustain a larger population.} The co-operatives has to give greater income to its farmer members. You have to increase turnover. Amul is the largest food company in India, but it needs to diversify to keep growing.

Sylevster da Cunha says about butter hoardings, he uses an apt analogy to explain their role, “if there’s a train that’s roaring along and you take off the engine, for a long time people won’t know that there’s no engine. But sure as hell, over a long period, depending on the incline of the railway track, it will slow down.” The outdoor campaign is Amul’s engine. And the polka-dotted blue haired girl makes a very appealing, entertaining engine driver.

INDUSTRY BACKGROUND

The Indian Industry is rapidly growing trying to keep pace with the galloping progress around the world. India’s dairy sector is expected to triple its production in next TEN years in view of expanding potential for export to Europe and the West.

The Indian milk market is dominated by a large number of small local manufacturer’s and regional players.

In the organized segment the major national and multinational players and their significant brands are as under.

MAJOR NATIONAL PLAYERS

Chandigarh Punjab State Cooperative Milk Producer’s Federation Ltd.

DELHIBikanerwala Foods Pvt LtdDaily FoodsDelhi Milk SchemeFun Foods Pvt LtdGanga Dairy Pvt LtdGarhawal paneer BhandarHaldiram Foods LtdKandhar DairiesMother Dairy Fruits & Vegetable LtdNagar Milk ProductsNanak Food IndustriesNarula Paneer Stores

Pure Dairy Farm ProductsRaj Dairy (Regd.)Rattan Milk ProductsRupa Dairy (Regd.)Rupa Ice Cream ParlourVRS Foods Ltd.

HARYANABharat Dairy UdyogDaily Foods (India)Gokul Dugdh Udyog Pvt LtdHaryana Dairy Development Cooperative Federation Ltd : Ambala, Ballabgarh, Bhiwani, Jind, Rohtak, SirsaHaryana Milk Foods ltdIndo-Nippon Foods LtdIndustrial Progressive (India) LtdKamdhenu Foods LtdKarnal Milk Foods LtdKwality Dairy India LtdMilkfood LtdModel Dairy Plant (NDRI)Modern Dairies LtdNanak Food Industries National Dairy Research InstituteParul Food Specialties Pvt LtdRahul Dairy & Allied Products LtdRishabh Agro Industries LtdRiverside Dairy LtdSarvopari Dairy Pvt Ltd

HIMACHAL PRADESHCocusan Foods LtdHimachal Pradesh State Cooperative Milk Producer’s Federation Ltd: Kangra, Mandi, ShimlaMahaan Foods Ltd

JAMMU & KASHMIRJammu Cooperative Milk Federation LtdKashmir Valley Milk Producers Cooperative Federation Ltd

PUNJABAmrit Dairy Asian Lakto Industries LtdCepham Milk Specialties LtdHSB Milk Food LtdHerman Milkfoods LtdIdasa India LtdJagatjit Industries LtdJio Dairy Products Pvt LtdMilk Specialties LtdMilkfood LtdNanak Food LtdNanak Milk Food (India) Pvt LtdNestle’s India LtdNijjer Agro Foods LtdPunjab Milkchem Ltd Punjab State Cooperative Milk Producers Federation Ltd : Amritsar, Bhatinda, Faridkot, Ferozepur, Hoshiarpur, Jalandhar, Ludhiana, Mohali, Patiala, Ropar, SangurRitesh Industries LtdRoadmaster Foods LtdSmithKline Beecham Consumer Healthcare LtdWockhardt Ltd

UTTAR PRADESHAjanta DairyAjanta Raj Proteins LtdAmrit foodBhole Baba Milk Food Industries LtdBrook Bond Lipton India LtdCentral dairy Farm (UP Pashudhan Udyog Nigam Ltd)

Continental Mikose (India) LtdCorydon Food Dairies Pvt LtdGoga Foods LtdGreen Park Dairy Products LtdGyan DairyHeinz India LtdJ K Dairy & Food LtdJebi Milk Food LtdK S Singhal DairyKap steel LtdLacchu RamMahaan Proteins LtdManish Dugdh ShalaMaulak Milk PlantMohan Dairy Nanak Food IndustriesNutricia India Pvt LtdParag Dairy, NoidaPoushtik Milk Products LtdPradeshik Cooperative Dairy Federation Ltd : Agra, Allahabad, ALomara, Azamgarh, Bareilly, Binjore, Dehra Dun, Faizabad, Farukabad, Garhwal, Gorakhpur, Jalaun, Jaunpur, Kanpur, Lucknow, Mathura, Meerut, Moradabad, Nanital, Pithoragarh, Pratapgarh, Rae Bareilli, Shahjahanpur, Unnao, VaranasiPropene Product Pvt LtdRadhika Milk Foods LtdRama Agro & Allied Industries Pvt LtdRama Dairy Products LtdRich Harvest Dairy Products LtdRoorkee Milk Products Pvt LtdSMC Foods LtdSheel International LtdShiv DairyTasty Dairy Specialties Pvt LtdTullu Agrotech (P) LtdUpper India DairyVRS Foods LtdVeer Milkfoods Ltd

The dairy industry is witnessing rapid changes. In search of better returns, the industry is widening Its focus to include traditional milk products, and these are emerging as a new profit centers for the organized sectors in the Indian market. As of now, ethnic dairy products account for 90% of all dairy products consumed in India, according to Mr. P.R Gupta, Editor, Technology of Indian Milk Product.

A dairy India publication, this handbook on process technology modernization has been authored by dairy professionals such as Dr. R.P Aneja, former Managing director of National Dairy Development Board (NDDB) and president of the Indian Dairy Association; Dr. B.N Mathur, Director, National Dairy Research Institute, Karnal; Dr. R.C Chandan, President of Global Technologies Inc; and Mr A.K Banerjee, Dairy Consultant and former Managing Director of the Bihar State Dairy Cooperation. According to the book, despite the mass appeal that traditional sweets have, the organized sector had confined itself to Western products such as milk powder, cheese, table butter and ice cream because technologies were available for their mass production. However, over the last two decades, institute such as National Dairy Research Institute and NDDB have made possible assembly line production of ethnic dairy products such as shrikhand, gulab jamun, paneer, kulfi, mishti doi, dahi and lassi. While established names in the Indian dairy industry such as Amul, Nestle, Britannia and Mother dairy have made deep inroads into booming market, small companies are following by example in regional markets. Some examples are Aarey in Maharashtra, Aavin in Tamil Nadu, Nandini in Karnataka, Vijaya and Visaka in Andhra Pradesh, Milma in Kerala, KC Das in Kolkatta and Banglore, Sugam in Vadodara, Mahanand in Maharashtra, Verka in Punjab, Parag in U.P, Sneha in MP, Parsi Dairy Farm in Mumbai. The creation of the Amul brand was much more than a mere advertising gimmick. R.S Sodhi discusses the marketing strategies that made Amul synonymous with milk in India. When we talk of Fast Moving Consumer Goods (FMCG) the foremost that come to our minds is soaps, toothpastes, oils and the frequency with which these goods are purchased-say once or twice a month. But there is nothing like milk, which is the fastest moving consumer item today. Purchased and sold 365 days a year, even twice in a single day, it has around

100% penetration across all the income segments, across all age groups. Weather it’s for tea or coffee for adults or milk for kids. The market for packaged milk is worth Rs 12,000 crore and growing at the rate of 10% p.a.

Potential and Growth of Liquid Milk Market in India

The level of income is the most important determinant for the demand for milk and its products. But with an increase in per capita income, the income elasticity of demand for milk is more than one. NSS data for 1993-94 indicates that the expenditure on liquid milk constitutes about 91% of the total per capita monthly expenditure on its products. The rapid changes in lifestyle and the increasing disposable income of strong middle class have considerably increased its demand. The market share of the organized sector is increasing gradually, while the unorganized sector’s share appears to be on the decline. Branding of milk too has become an integral part of all marketing activity. With the increase of per capita income, the consumption habits too have changed and expenditures for packaged and processed food have increased manifold. In the value terms, milk is the country’s number one agriculture commodity. Out of the total production of milk, 46% is consumed as fluid milk and dominates the consumption of livestock products across all income groups, while the market for packaged milk stands at a mere 15%.

The Liquid Milk Market In India

The milk market has always been an unorganized sector with local milk vendors catering to the household demand throughout the country. Besides these milk vendors, there are local pouch milk suppliers who again sell milk in their respective areas without bothering much about quality. However with the emergence of Amul as an all India milk provider, things are changing, at least in quite a few major towns in India where Gujarat Cooperative Milk Marketing Federation ………

Paras groups claims of introducing the ‘best and safest’ milk ever’, thanks to a process called BACTOFUGATION, has been countered by milk

majors Amul and Mother Dairy. Bactofugation uses centrifugal force technology which physically removes bacteria, spores and pathogens from milk, making the milk 100% harmful-bacteria free. Sources at NDDB, which controls the lion’s share of Delhi’s liquid pouch milk market with its Mother Dairy milk, say they follow the clarification and pasteurization process, making its milk 100% bacteria free. “We don’t know what Paras is talking about,” said a senior Mother Dairy official.

According to R.S Khanna, Regional Manager at Gujarat Cooperative Milk Marketing Federation, Amul has been selling bactofuged milk since 4 years. “It’s not a new technology. Claim made by Paras is incorrect. Paras officials insist that their milk is the only brand in pouches that is being pasteurized and bactofuged across Delhi and the NCR.Says K.K Bhandra, head of milk marketing, Paras Group, “Mother Dairy, Amul and DMS sell only pasteurized milk. We have invested about 1 crore in the bactofugation technology, which is a new benchmark in milk technology.”

AMUL

No. of cooperative unions : 12

No. of dairy plants : 19

Capacity : 6,595 thousand liter per day

Brand : Amul

Even as the sales of Amul milk in pouches increased by 31% and Ultra Heat Treated (UHT) in tetra packs by 16% during 2005-06 over the previous fiscal, Gujarat Cooperative Milk Marketing Federation (GCMMF) proposes to increase its reach in the metros and other cities. GCMMF, which had introduced pouch milk in Kanpur, Lucknow and Bhopal last year to overwhelming response from consumers, plans to focus on expanding distributing network in the exizting markets of Kolkata, Delhi and Mumbai said company sources here.The objective is to launch milk and milk products across India, strengthening the cooperative movement and at the same time preventing market takeovers by Multi-National Companies (MNC’s). And , since Amul as a brand has very strong association with liquid milk, it is attainable, sources assert. Allaying some unfounded fears, sources said, no cooperative has lost sales consequent to launch of Amul in respective markets. Rather, it has increased the overall sale of packed milk from the organized sector, as with ‘Mother Dairy’ and ‘Metro’ in Kolkata, encouraging local procurement of milk in all such markets. As against GCMMF’s total turnover of Rs 3,773 crore, the share of Amul pouch milk was Rs 900 crore in 2005-06, up from 625 crore in 2004-05, becoming the company’s main growth engine, virtually replacing its flagship products like Amul butter and cheese. The growth of UHT milk during the same period was 12% as it captured 60% of the country’s milk market in tetra packs.

NDDB

The operation flood (OF) programme initiated by NDDB in 1970 was a planned attempt to revive India’s Dairy Industry from a premature stagnation. The OF programme not only propelled the growth of dairy development in India, it also helped India becoming the world’s largest MILK producer. OF enhanced the income and quality of life for millions of India’s dairy farmers, most of them poor and many of them women. It has become India’s largest Dairy Development Programme. OF (1970-1996) created a strong foundation to transform India’s dairy sector into a vibrant business activity. It paved the way to take up new

initiative; and create new conditions to firm up India’s World Leadership in Milk Production. The new challenge for the dairy Industry was explore ways to emerge stronger using the network created under OF. The response is perspective 2010, a plan that attempts to take the dairy cooperative movement to its highest potential. Perspective 2010 focuses on four key areas. These include Strengthening Cooperatives Business, Production Enhancement, Assuring Quality and creating a National Information Network. The State Milk Marketing federations and the Milk Producers Cooperative Unions, the architects and key beneficiaries have identified the thrust area. The plan is designed keeping at helm the benefit to farmer at large. NDDB facilitated the planning process and will provide technical support and need-based finance for implementing Perspective 2010.

PARAG

No. of Cooperative Unions : 30

No. of Dairy plants : 16

Capacity : 1680 thousand Liter per day