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AMUL: A Case Study on Brand Diversification (new product launch too)

Amul is an Indian dairy cooperative society, based at Anand within the state of Gujarat. Formed in 1946, it is a cooperative brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers in Gujarat. Amul sparked the White Revolution in India, which made the country the world’s largest producer of milk and milk products.

With the liberalization of the Indian economy within the early 1990s, and therefore the subsequent entry of recent players, there was a change in lifestyles and therefore the food tastes of individuals. The new team that took over the management of the GCMMF within the mid-1990s hoped to require advantage of the change. The management adopted Total Quality Management (TQM) and set higher benchmarks for itself, in terms of growth. They also diversified the Amul portfolio, offering a variety of foodstuffs like ketchup, jam, ice-cream, confectioneries, cheese, and shrikhand.

According to some analysts, this diversification was probably not entirely demand-driven. Being a cooperative, GCMMF was compelled to shop for all the milk that was produced in Gujarat. And with milk production has increased since the mid-1990s, GCMMF had to make use of additional milk, and hence the pressure to make and market more and more processed-milk products. Amul had to expand the consumption base of milk-based products in India. It planned to form its products (butter and cheese) part of the regular diet in most households.

Amul launched its new products with the intention of accelerating the offtake of its basic milk products, including cheese. This successively was expected to extend the earnings of the farmers. The pizzas were expected to extend the sale of its cheese. The entry into the confectioneries market was another avenue for increasing milk consumption. This flurry of launches helped Amul broaden its appeal across all segments. Price was a plus that Amul enjoyed over its competitors. Amul’s products were priced 20-40 kind of than those of its competitors.

Analysts felt that Amul could price its products low thanks to the economies of scale it enjoyed. Amul created two new distribution set-ups: a chilly chain for ice-cream, and another for limited life fresh foods like curd. Expecting the demand for ready-to-eat foods to grow, Amul prepared to leverage the ice-cream cold chain for a replacement range of frozen foods, beginning with pizza. However, some analysts felt that because the pizzas would be made by the retailers, Amul would have little control over the standard of the pizzas. That was why Amul was marketing the pizzas under the name SnowCap.

Said S K Bhalla, Chief of internal control, “The product has received premature hype. Meeting consumer expectations is going to be a challenge until we make the frozen pizza in our own facilities.” According to some analysts, Amul’s obsession with keeping down manpower costs and dealer commissions may well be a weakness. In ice-creams as an example, Amul’s retail commission in Ahmedabad city was 17.5% which was 10% not up to what competitors offered.

They also have seen that Amul may not have the financial muscle that multinationals had to attain rapid climb. However, all said and done, Amul perceived to be geared up to form steady progress within the coming years with its products have become quite popular in both rural and concrete households. Said Vyas, “We’ve handled liberalization and globalization far better than our transnational rivals. it’s made us fitter than ever.”

Latest News:

Amul manager R.S. Sodhi on June 10 said the milk brand is launching ‘Ginger’ and ‘Tulsi’ variants so as to spice up community amid the COVID-19. Sodhi reasoned that since a coronavirus vaccine remains to return back, their new milk variants will ensure people have enough immunity till then to fight the deadly virus.

To read the case study of KitKat, click here

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