BUSINESS
Legacy brand Amul proves utterly butterly efficient From providing steady and reassuring dairy supply to foraying into edible oils, Amul is breaking new ground despite the pandemic. By PRASHANT JOSHI
I
t was Q&A time at the iconic NISSAN showroom in Sitra where Salaam Bahrain regularly hosts talk shows by eminent speakers. This time, the speaker was the dashing and efficient R.S. Sodhi, Managing Director of Amul, a famed Indian dairy co-operative with an annual turnover of ₹52,000 crore. One member of the audience asked, “Amul has redefined the world of dairy farming in India. Why are you not going global and trying to become like Nestle?” Sodhi explained, “We don’t want to be like Nestle! Amul is a social enterprise first and foremost and our responsibility is towards our 3.6 million dairy farmerowners. Our farmers get 80% of every rupee spent on Amul dairy products unlike FMCGs like Nestle which have huge overheads. If you consider the question of Amul going global, we have got all the capabilities to become a global leader. But consider - India is the world’s largest and fastest growing dairy market. The whole world wants to come to India, and only one-third of India is organised. If I go to Europe or America, these are saturated markets. So you have to snatch market share from other established players. For the same investment, the Indian market will yield more results.” In a nutshell, this is the story of Amul and explains the philosophy of the legacy food brand perfectly. The Gujarat Cooperative Milk Marketing Federation or GCMMF, which sells its products under the Amul brand, is owned by 3.6 million farmers. Of these, around 2.6 million farmers bring their milk twice daily to 18,600 village societies from where chilled milk is transported to district milk unions for processing into packaged milk and value-added products. The products then reach over a billion consumers daily via
10,000 distributors and a million retailers. However, right now, what has turned heads, figuratively speaking, is the stunning success of this rural enterprise through the testing times of the COVID-19 lockdown. While many businesses have struggled to maintain their supply lines, Amul is likely to gain market share in 2020-21 - Sodhi expects an enviable 15-16% revenue growth.
Testimony
India enforced a stringent lockdown between 25 March and 7 June but there were no instances of scarcity of dairy products or consumers being overcharged. In comparison, essential perishables like fruits and vegetables witnessed repeated fluctuations in
prices and availability. The lockdown was a testimony to how legacy dairy cooperatives saved the day for the Indian consumer. The presence of pan-India brands like Amul and others, such as Nandini in Karnataka, Aavin in Tamil Nadu or Verka in Punjab, meant steady supplies at regular prices. Farmer members of these dairy cooperatives were also largely protected—unlike vegetable growers they did not have to dump their produce and received a fair price which is close to 80% of the consumer rupee. Even dairy farmers in states like Uttar Pradesh and Maharashtra, where the cooperative network is weak, had to sell milk at a pittance, at rates of less than ₹20 a litre. Even as restaurants and hotels shut
SALAAM BAHRAIN | August | 2020
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