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Why Amul is still the taste of India

November 15, 2006 09:56 IST

After the success of Masti Chaas, Amul's renewing its focus on milk-based beverages. It has just launched cold coffee. More brands for the health conscious in this category and more action in the chocolate segment is on the cards next. So, how has the brand has withstood recent changes to remain the taste of india.

For some, it throws up money for a livelihood, for others it's a tasty thirst quencher. Linking these very different kinds of people is the milk that the Rs 3,800 crore (Rs 38 billion) Gujarat Co-operative Milk Marketing Federation or GCMMF markets. Together, the districts that contribute to Amul, collect 6.8 million litres everyday.

Flush with supply, two years ago Amul moved up the value chain by launching flavoured milk under the Kool brand. Since then, the brand has has grown by 50%. Following Stamina, an energy drink That was launched in the summer, Amul's pouring more into its beverage portfolio. Canned cold coffee, called Kool Cafe has just been rolled out nationally.

BM Vyas, chairman, GCMMF, told CNBC-TV18, "Our turnover of this beverage segment is about Rs 100 crore. In that respect, it may not be big but clearly the consumer of India is changing and his needs are changing.and as far as milk beverages are concerned, we are well equipped and we want to be there well before the conusmer demands it."

The market for milk beverages is just 2% of the Rs 7,500 crore beverage market, but Amul is confident it will grow. It plans to launch 6 to 7 more beverage variants especially for the health-conscious in the next couple of years. The fact that others like Britannia and Coca Cola have tried and failed or are still planning to, doesn't deter Amul. Here its 29 lakh strong farmer supplier network will be its trump card..

Also Amul's Rs 50 crore (Rs 500 million) chocolate business, that has a been lying low since the mid 90s but is available in a few Western and Southen states will see renewed interest. Amul will expand the Choco zoo, launched last year, and will ramp up distribution to 6.5 lakh retail outlets nationwide. But brand experts believe that this may be half-hearted. Amul hasn't so far done enough to support its non-milk brands, including butter and cheese.

Dircetor, MarketGate, Sharda Agarwal says, "It enters several categories but doesn't sustain investment in these categories, therefore, it is not able to fully realise the potential of the product it launches, which is why it can never really realise category potenial in this country."

While Amul continues to do well in and bet big on its milk brands, its been a summer of discontent. After founder, Verghese Kurien's unceremonious exit in March, a power struggle between the 12 milk co-operative unions began. Threats of walking out and marketing brands outside Amul were made. Peace was made by agreeing to shelve local brands to sell under Amul. But sources say that other cooperatives - Surat and Rajkot - may be the next trouble-makers. But GCMMF assures otherwise.

Vyas says, "Out of 12 dairies which are picking and markting milk in local areas, 10 have already decided to change over - 8 have changed, 2 are in the process of changing over - but in-priniciple they have passed the resolution of the board, and will implement it in next 1 month. The remaining two will also mostly discuss at the next board meeting and start selling milk under the Amul brand name."

But even if a split happens, brand Amul doesn't expect a dip in customer loyalty. Executive Director, FCB Ulka, Shashi Sinha explains, "The learning curve they've had, the wherewithal, the distribution infrastructure they set up, the procurement infrastructure they set up, they built up a consumer franchise, which you can't take away from them. It's difficult for anyone, whether someone from inside or a new company coming along - Indian or global - it just so happened that an internal player was talking of launching a brand, it could be anyone launching a brand in this space, it's difficult to dislodge Amul."

True, but the threat could be external than internal, as the country's biggest co-operative will face competition from the biggest corporate, Reliance Industries. Sources say Reliance plans to source 1 crore litres of milk daily for its dairy business. Soon, its Fresh stores will be stocking in-house dairy products. However, Amul insists that being a co-operative, it's tough to match its pricing and the Taste of India!

Molshree Vaid and Sunil Raghu