The Superstar of Indian Flavors: Amul, the Magician in Every Kitchen
The superstar of Indian Flavors! Imagine it as the magician behind the deliciousness in every Indian kitchen. From the tasty Milk and Butter to the cool Lassi, smooth Curd, and the sweet world of chocolate, it is like a food superhero making everything yummy. Can you take a guess? Bingo! It's none other than Amul, rightly hailed as "The Taste of India."
You will find every Indian household consuming at least one product of Amul on regular basis. Think of your kitchen like a fun stage, and Amul is the main actor, making mealtime an exciting adventure. With each sip, bite, or scoop, it tells stories of tradition, excitement, and tasty treats. More than just a food brand, Amul is like a food friend, bringing happiness to every meal and making ordinary moments feel extraordinary.
The market penetration of the brand is so deep, reaching those villages, which other brands can’t even name.
Did you know that Amul started as part of a revolution against a company supported by British and Sardar Patel had an important role in the beginning of this company?
AMUL is now amongst the largest Dairy companies in the world.
Let’s see Amul’s journey and the strategies it implemented to become a market leader.
THE START OF AMUL
During the British regime, India was a milk deficit country. It had to import milk from New Zealand. The quality of milk produced in India was inferior which led to the spread of diseases. Many British officers started falling sick, so the British Government had sent an Englishman to report the milk quality.
In the report, it was found that the quality of milk in Bombay was worse than the gutters in London. I’m sure that the report was biased for sure.
Such was the horrific condition as per the report. To prevent this matter from escalating further, the British Milk Commissioner intervened.
To get the better-quality milk, the Commissioner started looking for alternate milk supplies outside of Bombay. The Commissioner came across a company named Polson which was run by a Parsi man named Pestonjee Eduljee.
The company was very popular for its butter just like Amul is today, so the milk commissioner asked Polson to supply milk to Bombay from Anand. Polson had established a monopoly with the government which gave them powers to dominate the dairy sector in the country.
This led to the exploitation of farmers who supplied milk to the company as the company would pay a minimal amount and later sell it at a much higher price in Bombay. Milk contractors were amongst the ones benefiting the most from this monopoly as they were the milk collectors and distributors.
The farmers with their leader Tribhuvan Das Patel met Sardar Vallabh Bhai Patel and asked for his help. He promised to help the farmers and asked Morarji Desai to help.Morarji planned a strike against milk contractors. Not a drop of milk was sold to them. Finally, after 15 days, the Government relented, and Kaira District Co-operative Milk Producers Union was formed on 19th December 1946. This was later renamed to Anand Milk Union Ltd.
The idea was simple to directly export the milk to the Bombay Milk Scheme hence removing the middlemen i.e. milk contractors.
In June 1948, the pasteurization of milk began. This meant that a large amount of milk could be stored for longer without perishing. This changed life for the entire community. In 1949, Tribhuvan Das Patel asked Kurien to join this co-operative. Architect of “Operation Flood”, the largest dairy development programme in the world, Dr. Verghese Kurien enabled India to become the largest milk producer in the World through AMUL.
He held various positions in his career starting from Executive Head of Kaira Union in 1950, Founder Chairman of National Dairy Development Board from 1965 to 1998, the Gujarat Co-operative Milk Marketing Federation Ltd, from 1973 to 2006 and the Institute of Rural Management from 1979 to 2006, his professional life has been dedicated to empowering Indian farmers through co-operatives.
He was instrumental in developing the entire co-operative model with H M Dalaya. H.M. Dalaya managed entire manufacturing /processing and he made Skimmed Milk powder from buffalo milk which was the first of its kind in the world and a huge success.
NAMING AMUL
Dr. Kurien wanted to name the brand as it needed recognition among the masses. He consulted various marketing agencies for the same and the one which struck him was AMUL, an acronym for Anand Milk Union Limited and means priceless in Sanskrit.However, the agencies suggested to him it wasn’t a good idea to give the company an Indian name.
They thought it won’t be able to sell their products under an Indian company name.The agencies suggested various names like Prince of Wales butter, Lord's butter, Express butter, as this would give the impression of a foreign company and people would buy products easily.
Dr. Kurien however rejected this idea and thought that the co-operative model required an Indian name and settled on AMUL. This was a great move and Amul was a spectacular consumer marketing success in India, post-Independence states.
AMUL’S Win-win Business Strategy
AMUL followed the co-operative business model, as it worked together as a community of farmers who would procure milk and sell it to AMUL and receive income based upon the quantity and quality of milk provided.
Amul followed a simple idea of increasing its business volume. Increasing the volume of its operations will lead to a reduction in the cost per litre of milk and automatically reduce the cost per milk packet. So, collect more milk and reduce the cost.
By doing so, Amul was able to give the best price to its farmers, while also offering the lowest price to its consumers. This was win-win for all.
Amul applied the same business strategy to all its product lines, and this is one of the reasons why Amul products are cheap and affordable but aren’t compromised on their quality and are loved by the people.
The total cost of all the processing, manufacturing, distribution, and logistics is just 20% of revenue, which is one of the lowest in the country. Which also means, farmers can take 80% of their money home.
Amul’s organizational structure – Anand Pattern
A dairy cooperative society at the village level is responsible for collecting the milk. The District Milk Union, to which the village dairy is affiliated, procures, and processes the milk; and the State milk federation markets the milk and milk products.
All the personnel involved are selected or elected by the farmers — whether it is to manage the various levels efficiently or run the dairy profitably. Most importantly, the cooperatives understand and respond to the needs and demands of the farmers. Amul has made all the processes very streamlined and standard and that has made it possible for them to replicate this model across the country.
Lot of automation has gone into each stage, for e.g. after collecting milk it goes through Electronic Fat Testing Machine where it is checked for content, quality, and quantity, and based upon this the farmers are given a token for collecting cash.
Today, GCMMF is India’s largest food products marketing organization. It is jointly owned by about 36 lakh farmers from 18,000 villages who are members of the 17 unions.
A three-tier Model of Amul
Amul is an amazing organization that is simple and yet awe. It operates on a three-step method which ensures that each body performs its function efficiently. The three tiers are:
1. Village Dairy Cooperative Society Every manufacturer is a member of the cooperative village which is a manufacturer's community.
2. District Milk Unions -Village Dairy Cooperative Society members elect their representatives which collectively forms the District Milk Union.
3. State Milk Federation-The State Milk Federation is responsible for the distribution and sale of milk products on the market.
Expansion and Innovation
R.S Sodhi, the current Managing Director of AMUL worked with Dr. Kurien for more than 30 years and gained expertise in the functioning of Amul’s business. He has focused majorly on three areas.
1. Expansion in Procurement- In the last 10 years, Amul has expanded its procurement of milk in various new territories. It now wishes to expand in the south of India, and it has already captured the market in the West, North, and Eastern parts.
2. Expansion in Processing- Amul has added another 50 new product lines and is diversifying the categories of products sold like Milkshakes, Ice-cream, Chocolates. The expansion in processing has led to twice an increase in milk procurement, an increase in farmer's income by 4 times, and a 238% increase in turnover.
3. Expansion in Distribution- The expansion in the Distribution channels of Amul has led to an increase in retail counters and an increase in distributor wholesalers.
Factors that led to Amul's Success
Amul Girl
The Amul Girl, a renowned figure in Amul's advertising campaign, made her debut in 1966 when Sylvester da Cunha, the managing director of an advertising agency, was hired to create an ad campaign for Amul Butter. This campaign featured topical ads addressing everyday issues and gained immense popularity, earning a Guinness World Record for being the longest-running ad campaign globally.
Decoding The Whole Supply Chain
One of the main and biggest reasons for Amul’s success was that they managed the whole supply chain of milk production so efficiently. Starting from the pooling of milk from various small dairy farmers to supplying it to the end consumer. Amul follows a three-tier cooperative structure which consists of a dairy cooperative society at the village level that is affiliated with milk unions at the district level, which in turn is federated to a milk federation at the state level. Milk is collected at the village dairy society, procured, and processed at the district milk union and marketed at the state milk federation.
Constant Innovation
Today Amul has over 2000+ products under its brand name. Started just as a milk cooperative, is today the biggest gaint in the milk and dairy product segment. And it’s not just about its product line but also its marketing campaigns and strategies. Their most recent social media campaign #BEMOREMILK is gaining immense popularity.
Diversification
With daily constant efforts, Amul managed to cater to every dairy-related segment. Making products for the needs of the kids, men, women, health conscious & taste conscious. You name it & they have it. Through consistent efforts, Amul has managed to have a diversified portfolio in terms of products & it is very hard for any new player to enter the market.
Trust Building
By delivering the best quality products at low rates, Amul has built trust and brand loyalty among its target market. Also, a fact to notice is that Amul was the first company to offer condensed milk at affordable prices and made a significant mark among the lower-income group.
Amul’s Marketing and Branding
Amul's marketing and branding strategy boasts an iconic achievement – the 'AMUL Butter GIRL' holds the world record as the longest-serving brand mascot since 1967. The enduring success of this mascot lies in its ability to stay relevant and resonate with ongoing events in the country.
Notable instances of the Amul Girl's timely appearances include during India's 'surgical strikes,' the country's milestone moon mission in 2008, the visit of former U.S. President Trump to India, and the release of the film 'Bajrangi Bhaijan.' These ads showcase Amul's knack for staying in sync with the pulse of the nation.
Interestingly, Amul's advertising strategy differs from conventional approaches. Despite having a diverse range of products, the company doesn't allocate substantial budgets to advertising. Instead, it employs a 'Uniformed Umbrella' strategy, where all products are marketed under the singular brand name AMUL. This approach leverages the strong brand value associated with Amul across its entire product line.
Key Lessons from the Journey:
1. Win-win for Consumer as well as the farmer – Provide low priced good quality products for the consumers, at the same time, provide best value to the farmers
2. Creative Marketing Impact: The iconic Amul Girl and timely, humorous advertisements showcase the effectiveness of creative marketing. Staying relevant and connecting with consumers emotionally can create a lasting impact.
3. Unified Branding Strategy: Amul's 'Uniformed Umbrella' strategy, where all products are marketed under the common brand name AMUL, demonstrates the strength of a unified branding approach. This enhances brand visibility and leverages a strong brand identity across diverse product lines.
4. Commitment to Quality: Amul has consistently prioritized quality in its products. This commitment has built trust among consumers, contributing to brand loyalty and longevity.
5. Innovation in Operations: Amul's innovative spirit extends beyond marketing to operations. It was the first to produce skimmed milk powder from buffalo milk and implemented a three-tier cooperative structure, contributing to increased efficiency and cost-effectiveness.
6. Technological adaptation: Amul has been quick in adapting technology at all the stages, right from collection centers to processing.
Amul uses Automatic Milk Collection systems, to collect milk from farmers, simultaneously capturing details about the farmers and milk. The farmers get paid instantly within a matter of a few seconds. The milk is examined, grated, and transported to many dairies located across the country.
The milk delivery trucks deliver milk during the early morning to every nook and corner of the country. These activities occur daily at clockwork precision.
The learnings from Amul Case Study signify that the combined efforts of these people are the foundation of the astounding success enjoyed by Amul.
We are proud of this brand! Dr. Kurien and Tribhuvan Patel will always be remembered for helping India flow with strength and energy! This case study on Amul will make you question the white revolution and how Amul capitalized on the opportunity.
Thank you for reading this article.
