A

MINI PROJECT REPORT ON

“MARKETING STRATEGY ”

OF AMUL

SUBMITTED TO:

SRM UNIVERSITY, CHENNAI

SUBMITTED BY:.

ANJALI SINHA (3510910063)

ANUPAM ROY(3510910073)

ARJUN VIKRAM(3510910083)

ASHIPA SINHA (3510910104)

UNDER THE GUIDANCE

Of

B.HARIPRIYA

ACKNOWLEDGEMENT1

We would like to express our deepest gratitude and thanks to Dr.

Jayashree Suresh, Head of the Department for her valuable support

in doing my project. She has been a source of encouragement and

guidance in all our endeavors.

We express our profound thanks to B.Haripriya project guide, for her

consistent encouragement and invaluable suggestion in completing

this project, without her the completion of this project would be

practically impossible.

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S.NO CONTENT PAGE NO.

i Introduction 5ii Amul business model 7iii Product development 7iv Distribution 9v Advertising and sales promotion 10vi Looking ahead 11vii Amul The Taste of India 14viii Three tier amul model 18xi Impact of amul model 22

x Achievements of amul model 24xi Amul brand building 25xii Product list of Amul 29

xiii Market research 36xiv Strategic positioning and planning 37xv Conclusion 39

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Introduction

Gujarat Cooperative Milk Marketing Federation (GCMMF), the largest food company in India, recorded a turnover of Rs 2882 crore ($ 0.65 bn) in 2003-04. Its flagship brand 'Amul' was the market leader in butter, whole milk, cheese, ice cream and dairy whitener. GCMMF was the largest cooperative movement in India with 2.2 million milk producers of Gujarat organized in 10,552 cooperative societies. GCMMF collected 5 million litres of milk per day from its shareholders who owned 3.2 million buffaloes, one million cows and 0.3 million crossbred cows. The Federation's extensive marketing network comprised 3000 distributors and 500,000 retailers spread across the country.

Amul's genesis was linked to the freedom movement in India. Sardar Vallabhbhai Patel, an eminent Indian freedom fighter encouraged the dairy farmers from the Kaira district in Gujarat to form a cooperative to counter the 'exploitatively' low prices offered for their milk by the monopoly milk supplier of the area, Polson's Dairy. The dairy farmers met in Samarkha (Kaira district, Gujarat) on the 4th of January 1946, and decided to set up a milk producers' cooperative that would deal directly with the Bombay government, the final buyer of their milk. This was the origin of the Anand model.

Initially, when the Bombay government refused to deal with the cooperative, the farmers called a strike. The government finally relented when Bombay went without milk for a fortnight. The successful union registered itself as the Kaira District Cooperative Milk Producers' Union Ltd. (KCMPUL), Anand, in Gujarat in December 1946.

Under the chairmanship of Tribhuvandas Patel (Patel), the Kaira Union, headquartered in Anand, began with two milk societies, and a daily milk collection of 250 litres. When it started operations, the cooperative included two tiers. At the base was the primary village dairy cooperative society (DCS) of milk producers. Several such village cooperatives together formed the district milk producers' union at the second level, which was entrusted with procurement and processing of milk. By appointing qualified technologists and professional managers, the cooperatives helped the farmers to leverage modern management practices and technology. Varghese Kurien's (Kurien) association with KCMPUL began soon after the inception of the cooperative.

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He had obtained a master's degree in Mechanical Engineering from Michigan State University in 1948 and subsequently completed an assignment at the Government's Research Creamery in Anand when Patel met him. Patel named Kurien, KCMPUL's General Manager in 1950. In 1954, when the Bombay Milk Scheme refused to take all the milk that KCMPUL had produced, the cooperative found itself saddled with surplus milk.

Apart from marketing milk in and around Anand, KCMPUL embarked on a wide range of dairy processing activities. To differentiate its high quality products, KCMPUL decided to brand its produce. In 1955, KCMPUL adopted the brand name 'Amul' for its products. 'Amul', derived from the Sanskrit word 'Amulya', meaning priceless, also stood for 'Anand Milk Union Limited'.

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Amul's Business Model

Amul followed a unique business model, which aimed at providing 'value for money' products to its consumers, while protecting the interests of the milk-producing farmers who were its suppliers as well as its owners. As milk was a perishable item, the farmer suffered a loss if it was not sold before the end of the day.

Amul bought all the milk offered by the milk producer, made timely payment, and shared with the producers the profit generated from marketing the milk and milk products under the Amul brand name...

Organizational Structure

The cooperative model pioneered by Amul - a union of primary village dairy cooperatives- came to be known as the "Anand pattern" cooperative system. It was a three-tier structure that comprised village societies, district level dairy unions and a state level federation.

Each tier was economically independent of the others and comprised representatives elected from the tier below it. The organizations at each level were governed by their own bylaws, and were managed by democratically elected boards.

Product Development

Amul's product development was driven both by the spirit of the cooperative system and profitability. Being a cattle farmers' cooperative, Amul was committed to buying all the milk offered by the farmer. The perishable nature of milk made it imperative for Amul to process the surplus milk and enter new product categories as production increased...

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Butter

Launched in 1955, butter was one of the first milk products offered by Amul. It was also the first time Amul successfully challenged the hegemony of an established brand. Amul's earliest competitor, Polson had been the monopoly milk supplier to the Bombay Milk Scheme. Amul displaced Polson to emerge as the undisputed leader in the butter market...

Cheese

GCMMF launched processed cheese in 1959 followed by cheese powder in the early 1970s. In the 1980s the popularity of cheese increased...

Ghee, Skimmed milk powder and Baby food

Amul launched ghee (clarified butter) and skimmed milk powder in 1955. Amul Ghee was an instant success...

Milk and UHT Milk

Amul was the market leader in the Gujarat whole milk market with a 90% market share in 2002. Apart from supplying milk to parts of Maharashtra and Rajasthan, GCMMF also sold milk to the NDDB owned Mother Dairy in Delhi...

Pricing

Amul's philosophy had all along been to deliver value for money to its customers. Despite being priced economically, Amul maintained its product quality...

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Distribution

GCMMF's formidable distribution network comprised 300 stock keeping units, 46 sales offices, 3,000 distributors, 100,000 retailers with refrigerators, an 18,000-strong cold chain, and 500,000 non-refrigerated retail outlets.

During the year, the major development on the distribution front was the development and alignment of four distribution highways-those of Fresh Products, Chilled Products, Frozen Products and Ambient Products. This is a significant achievement because it allows us to develop synergies among all our product lines and to leverage these highways to introduce and distribute new products as per market demand. I take pleasure in declaring that no other organization in India has been able to develop this kind of channel synergy so far.

Another major initiative undertaken during the year was the Time-based Military Technique (TMT) of distribution. This has been deployed to effect a nationally synchronized mass distribution of our products with the objective of achieving total channel penetration on a single day. I am pleased to declare that this initiative has proved to be very successful. Most of our products launched or re-launched through this technique have seen significant gains in distribution and availability.

After Distributor Salesmen in the previous year and Distributors in the year before last, it was the turn of the top Retailers across the country to participate in the Amul Yatra Programme. As you are aware, the Amul Yatra Programme is a unique experiment conducted by your Federation to bring our channel partners face to face with our cooperative institutions, activities, culture and achievements through a guided tour in and around Anand. A total of 114 Distributor Salesmen and 482 top retailers from across the country participated in the Amul Yatra this year. With the opening of several new milk markets and 3 separate Milk Sales Offices at Mumbai, New Delhi and Boisar, the number of Milk Area Delivery Agents has increased. 95 Milk Area Distribution Agents also visited Anand for Amul Yatra. Distributors have further enhanced their infrastructures in terms of installation of cold storage arrangements, enhanced bank guarantee limits with Federation and introduced good quality delivery

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vehicles. An objective evaluation was done in the form of distributor renewal and Performance appraisal.

For understanding the level of adherence to infrastructural and procedural norms laid out by Federation and compliance to the same by our Distributors, a pilot initiative of Distribution Audit was undertaken for 70 Wholesale Distributors. With one of the strongest cold chain distribution network in the country today, Federation today owns 13 state-of-the-art cold rooms at various depot locations.

Amul reflects strong and growing consumer faith in Amul brand. During the year Northern India had faced a severe milk crisis. At the request of government, Amul diverted milk powder stocks to Delhi thereby depriving export market. As a result, Federation's overall export turnover has dropped by 40 percent.

Advertising and Sales Promotion

Over the years, Amul's advertising philosophy had been "to be simple, fresh and innovative". The clean, emotion-based ads refrained from using hi-tech special effects, and aimed at maintaining the perfect balance between the traditional and the modern. During the year, your Federation's sales registered a growth of 5 percent increase to reach Rs. 2,881.96 crores including consignment sales of Rs.62.95 crores. The dairy line grew by about 18% despite the loss of a sizable edible oil business. This year, the sale of Amul Milk in pouches increased by 34 percent in value terms. A notable development in the area of liquid milk in pouches has been the successful launch of Amul Milk in the Delhi market during November 2003. Within under 60 days of launch, we had achieved sales of 1 lakh liters per day. UHT Milk has grown in both value and volume terms by 60 percent, which shows that it has really come upon the high growth stage. Amul ice cream achieved a sales value growth of 11 percent, and has come out as the undisputed market leader. Amul and Sagar brand pure ghee sales in value increased by 17 per cent over the previous year. Despite intense competition, sales value of Amul Butter grew by 19 percent and that of milk powders has firmed up further. The sales of the Amul Cheese range

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increased by 13 percent. Products like Flavoured Milk, Amul Fresh Cream, Paneer, Mithaimate, Softy Mix, and fresh curd demonstrated their potential to become dominant brands in the coming few years.

Looking Ahead

The liberalization of the dairy industry in 1991 had seen a number of multinational players like Britannia, Le Bon, Dabon and Hi-Life enter the sector. Analysts wondered whether a co-operative with limited financial means could stand up to the might of these MNCs, and if its low pricing strategy would continue to stay relevant. MNCs like Pizza Hut, Domino's, Hindustan Lever Limited and Cadbury had also become competitors. Amul had proved its detractors wrong and firmed up ambitious growth plans. There is a steady increase in consumer expectations. Product and service quality is rapidly becoming the minimum threshold for consumer acceptance. To achieve and maintain competitive advantage, innovation in product design and delivery are increasingly essential. Innovation must now define us as an organization. Amul must innovate at each stage in its value chain - production, procurement, processing, marketing and branding.

Innovation cannot be mandated or forced out of people. It is everywhere a function of the quality of people and environment. In these times of increasing market opportunities, its need to devise more effective ways of attracting and retaining skilled human resources. It is to be realized that just as the market is expanding for our products, so it is opening up new opportunities for the skilled people that we need to tap the market. Further, it does not suffice merely to retain skilled human resources. It is also necessary to provide them an adequately self-motivating work environment that draws out the best out of them on a sustained basis. Therefore, competitiveness must also encompass effective human resource management. To this end, amul has to find new strategies.

In the past, illustrious leaders like the late Shri Tribhuvandas Patel, Bhurabhai Patel, Jaswantlal Shah - to name only a few - understood the importance of professionalism in the management of cooperatives. They always

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encouraged attitudes and activities geared towards a results orientation. Today's leaders have a duty and an obligation to carry forward that tradition of identifying and nurturing professionalism.

Most of the State Federations of India have declined to accept such partnerships where the Government is in majority. Even where it was accepted, the cooperatives are now changing their minds and reverting to the pure cooperative movement. They should ensure the highest level of professionalism at the cooperative level. They should give the professionals full freedom to perform instead of interfering in operational matters-thereby limiting the growth of the organisation.

From the year 1994, Amul’s unions have been engaged in the practice of third party validation of its practices. Since then, this have been awarded the ISO 9002:2000, the HACCP, the ISO 14001 and similar marks of excellence in milk procurement and processing. It have also been given a certificate of merit from IMC Ramkrishna Bajaj National Quality Award during last year.

The year 1994 was an important watershed for Federation. It marked bold foray into the brave new world of portfolio diversification and new product development. It was at this time when Amul took its first steps outside the security of our traditional products: powders, butter among others. Since then, it has emerged as the food organization with what may well represent the most diversified product portfolio - ranging from ice cream and dahi to Long Life and Flavoured milk. We have learnt to be on the constant lookout for changing market requirements and to adapt to these changes proactively.

Today, there is no doubt that we are a part of the world market. As everywhere else, the market trend in India is towards the growing importance of fresh products. The coming years will see increasing volumes being generated from fresh milk, Long Life Milk, curds and the like. Because our milk procurement and processing capacity is unparalleled in the country and the region and because we have a brand equity that is unsurpassed in the food business sector, your Federation is in a position to leverage these assets to effectively command the market leader's position in the emerging fresh dairy products market. However, here too we cannot be complacent. We must

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constantly create and update our competencies in these products so as lead, set and exceed market expectations.

Your Federation has now developed competence in distributing fresh products on daily basis. This is equally true of long life products held at ambient temperature, products requiring deep-freezing during storage or transportation, and products that require zero degree temperature. This established competence is, and will continue to be, an essential element in building synergies among product lines - ultimately creating superior economies of scale.

Based on the work done in the last decade, the changes that we have built in the Organisation at all levels, and with the new portfolio of products we have developed, I feel confident of maintaining our market share growth. I also feel confident that your Federation will be able to increase its sales further by close to another Rs.500 crores in the current year.

Your Federation has always tried to be a step ahead of the market. It has always been a model to which other cooperatives have looked up as an example and inspiration as well as one from which many have benefited. Those who had scoffed at the idea of cooperation as a business model are today trying to emulate it. Thankfully, we need not be remembered for any of the wrong reasons. Amul has always been and remains a movement that stands for the farmer. We have always espoused the values of social justice, integrity and growth with equity. If Amul deserves to be remembered for anything, first and foremost it is for the difference we have made and are making in the lives of millions of farmers. Against all odds, we have managed to replace a million furrows of hopelessness with at least a faint line of the smile of hope. That line makes a difference. That puts the real shine on the face of India.

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AMUL, THE TEST OF INDIA

The Amul Plant at Anand featuring the Milk Silos

Amul ("priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand.) formed in 1946, is a dairy cooperative in India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.8 million milk producers in Gujarat, India.

AMUL is based in Anand, Gujarat and has been an example of a co-operative organization's success in the long term. It is one of the best examples of co-operative achievement in the developing economy. "Anyone who has seen ... the dairy cooperatives in the state of Gujarat, especially the highly successful one known as AMUL, will naturally wonder what combination of influences and incentives is needed to multiply such a model a thousand times over in developing regions everywhere." The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand.

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Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Unions making up GCMMF have 2.8 million producer members with milk collection average of 10.16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 did not succeeded, but now it has fresh plans entering the Japanese markets [6]. Other potential markets being considered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognised as a key person behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.

500 gram pack of Amul Cheese

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The Birth of Amul and development of India’s Dairy Cooperative Movement

The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the country. The Kaira District Cooperative Milk Producers’ Union Limited was registered on December 14, 1946 as a response to exploitation of marginal milk producers by traders or agents of existing dairies in the small town named Anand (in Kaira District of Gujarat). Milk Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand. Often milk went sour as producers had to physically carry the milk in individual containers, especially in the summer season. These agents arbitrarily decided the prices depending on the production and the season. Milk is a commodity that has to be collected twice a day from each cow/buffalo. In winter, the producer was either left with surplus / unsold milk or had to sell it at very low prices. Moreover, the government at that time had given monopoly rights to Polson Dairy (around that time Polson was the most well known butter brand in the country) to collect milk from Anand and supply it to Bombay city in turn. India ranked nowhere amongst milk producing countries in the world in 1946.

Angered by the unfair and manipulative trade practices, the farmers of Kaira District approached Sardar Vallabhbhai Patel (who later became the first Deputy Prime Minister and Home Minister of free India) under the leadership of the local farmer leader Tribhuvandas Patel. Sardar Patel advised the farmers to form a Cooperative and supply milk directly to the Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices to the producers). He sent Morarji Desai (who later became Prime Minister of India) to organize the farmers. In 1946, the farmers of the area went on a milk strike refusing to be further oppressed. Thus the Kaira District Cooperative was established to collect and process milk in the District of Kaira in 1946. Milk collection was also decentralized, as most producers were marginal farmers who were in a position to deliver 1-2 litres of milk per day. Village level cooperatives were established to organize the marginal milk producers in each of these villages.

The Cooperative was further developed & managed by Dr. V Kurien along with Shri H M Dalaya. The first modern dairy of the Kaira Union was established at Anand (which popularly came to be known as AMUL dairy

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after its brand name). Indigenous R&D and technology development at the Cooperative had led to the successful production of skimmed milk powder from buffalo milk – the first time on a commercial scale anywhere in the world. The foundations of a modern dairy industry in India were thus laid since India had one of the largest buffalo populations in the world.

The success of the dairy co-operative movement spread rapidly in Gujarat. Within a short span five other district unions – Mehsana, Banaskantha, Baroda, Sabarkantha and Surat were organized. In order to combine forces and expand the market while saving on advertising and avoid a situation where milk cooperatives would compete against each other it was decided to set up an apex marketing body of dairy cooperative unions in Gujarat. Thus, in 1973, the Gujarat Co-operative Milk Marketing Federation was established. The Kaira District Co-operative Milk Producers’ Union Ltd. which had established the brand name AMUL in 1955 decided to hand over the brand name to GCMMF (AMUL). With the creation of GCMMF (AMUL), we managed to eliminate competition between Gujarat’s cooperatives while competing with the private sector as a combined stronger force. GCMMF (AMUL) has ensured remunerative returns to the farmers while providing consumers with products under the brand name AMUL.

This was possible due to the leadership of the founder Chairman of AMUL, Tribhuvandas Patel and the vision of the father of the White Revolution, Dr. Verghese Kurien who worked as a professional manager at AMUL. Numerous people contributed to this movement which would otherwise not have been possible.

Dr. Verghese Kurien, the World Food Prize and the Magsaysay Award winner, is the architect of India’s White Revolution, which helped India emerge as the largest milk producer in the world.

Impressed with the development of dairy cooperatives in Kaira District & its success, Shri Lal Bahadur Shastri, the then Prime Minister of India during his visit to Anand in 1964, asked Dr. V Kurien to replicate the Anand type dairy cooperatives all over India. Thus, the National Dairy Developed Board was formed and Operation Flood Programme was launched for replication of the Amul Model all over India.

Operation Flood, the world’s largest dairy development programme, is based on the experience gained from the ‘Amul Model’ dairy

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cooperatives. The facilities at all levels are entirely farmer-owned. The cooperatives are able to build markets, supply inputs and create value-added processing. Thus, Amul Model cooperatives seem to be the most appropriate organizational force for promoting agricultural development using modern technologies and professional management and thereby generating employment for the rural masses and eradicating poverty in these undeveloped areas. India has already demonstrated the superiority of this approach.

The Three-tier "Amul Model"

The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The above three-tier structure was set-up in order to delegate the various functions, milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation. This helps in eliminating not only internal competition but also ensuring that economies of scale is achieved. As the above structure was first evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood Programme, it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives.

Responsible for Marketing of Milk & Milk Products Responsible for Procurement & Processing of Milk Responsible for Collection of Milk Responsible for Milk Production

3.1 Village Dairy Cooperative Society (VDCS)

The milk producers of a village, having surplus milk after own consumption, come together and form a Village Dairy Cooperative Society (VDCS). The Village Dairy Cooperative is the primary society under the three-tier structure. It has membership of milk producers of the village and is governed by an elected Management Committee consisting of 9 to 12 elected representatives of the milk producers based on the principle of one member, one vote. The village society further appoints a Secretary (a paid employee and member secretary of the Management Committee) for management of the day-

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to-day functions. It also employs various people for assisting the Secretary in accomplishing his / her daily duties. The main functions of the VDCS are as follows:

Collection of surplus milk from the milk producers of the village & payment based on quality & quantity

Providing support services to the members like Veterinary First Aid, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, conducting training on Animal Husbandry & Dairying, etc.

Selling liquid milk for local consumers of the village

Supplying milk to the District Milk Union

Thus, the VDCS in an independent entity managed locally by the milk producers and assisted by the District Milk Union.

3.2 District Cooperative Milk Producers’ Union (Milk Union)

The Village Societies of a District (ranging from 75 to 1653 per Milk Union in Gujarat) having surplus milk after local sales come together and form a District Milk Union. The Milk Union is the second tier under the three-tier structure. It has membership of Village Dairy Societies of the District and is governed by a Board of Directors consisting of 9 to 18 elected representatives of the Village Societies. The Milk Union further appoints a professional Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his / her daily duties. The main functions of the Milk Union are as follows:

Procurement of milk from the Village Dairy Societies of the District

Arranging transportation of raw milk from the VDCS to the Milk Union.

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Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc.

Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members.

Providing management support to the VDCS along with regular supervision of its activities.

Establish Chilling Centres & Dairy Plants for processing the milk received from the villages.

Selling liquid milk & milk products within the District

Process milk into various milk & milk products as per the requirement of State Marketing Federation.

Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.

3.3 State Cooperative Milk Federation (Federation)

The Milk Unions of a State are federated into a State Cooperative Milk Federation. The Federation is the apex tier under the three-tier structure. It has membership of all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. The State Federation further appoints a Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his daily duties. The main functions of the Federation are as follows:

Marketing of milk & milk products processed / manufactured by Milk Unions.

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Establish distribution network for marketing of milk & milk products.

Arranging transportation of milk & milk products from the Milk Unions to the market.

Creating & maintaining a brand for marketing of milk & milk products (brand building).

Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services.

Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions.

Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk Unions.

Arranging for common purchase of raw materials used in manufacture / packaging of milk products.

Decide on the prices of milk & milk products to be paid to Milk Unions.

Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same.

Conduct long-term Milk Production, Procurement & Processing as well as Marketing Planning.

Arranging Finance for the Milk Unions and providing them technical know-how.

Designing & Providing training on Cooperative Development, Technical & Marketing functions.

Conflict Resolution & keeping the entire structure intact.

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Impact of the "Amul Model"

The effects of Operation Flood Programme are more appraised by the World Bank in its recent evaluation report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood Programme in 70s & 80s has contributed in increase of India’s milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation Flood period to more than 60 MMT at the end of Operation flood Programme. Thus, an incremental return of Rs. 400 billion annually have been generated by an investment of Rs. 20 billion over a period of 20 years. This has been the most beneficial project funded by the World Bank anywhere in the World. One can continue to see the effect of these efforts as India’s milk production continues to increase and now stands at 90 MMT. Despite this four-fold increase in milk production, there has not been drop in the prices of milk during the period and has continued to grow.

Due to this movement, the country’s milk production tripled between the years 1971 to 1996. Similarly, the per capita milk consumption doubled from 111 gms per day in 1973 to 222 gms per day in 2000. Thus, these cooperatives have not just been instrumental in economic development of the rural society of India but it also has provided vital ingredient for improving health & nutritional requirement of the Indian society. Very few industries of India have such parallels of development encompassing such a large population.

These dairy cooperatives have been responsible in uplifting the social & economic status of the women folk in particular as women are basically involved in dairying while the men are busy with their agriculture. This has also provided a definite source of income to the women leading to their economic emancipation.

The three-tier ‘Amul Model’ has been instrumental in bringing about the White Revolution in the country. As per the assessment report of the World Bank on the Impact of Dairy Development in India, the ‘Anand Pattern’ has demonstrated the following benefits:

The role of dairying in poverty reduction

The fact that rural development involves more than agricultural production

The value of national ‘ownership’ in development

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The beneficial effects of higher incomes in relieving the worst aspects of poverty

The capacity of dairying to create jobs

The capacity of dairying to benefit the poor at low cost

The importance of commercial approach to development

The capacity of single-commodity projects to have multi-dimensional impacts

The importance of getting government out of commercial enterprises

The importance of market failure in agriculture

The power & problems of participatory organisations

The importance of policy.

Achievements of the "Amul Movement"

The phenomenal growth of milk production in India – from 20 million MT to 100 million MT in a span of just 40 years - has been made possible only because of the dairy cooperative movement. This has propelled India to emerge as the largest milk producing country in the World today.

The dairy cooperative movement has also encouraged Indian dairy farmers to keep more animals, which has resulted in the 500 million cattle & buffalo population in the country - the largest in the World.

The dairy cooperative movement has garnered a large base of milk producers, with their membership today boasting of more than 13 million member families.

The dairy cooperative movement has spread across the length and breadth of the country, covering more than 125,000 villages of 180 Districts in 22 States.

The dairy cooperatives have been able to maintain democratic structure at least at the grass-root level with the management committee of the village level unit elected from among the members in majority of the villages.

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The dairy cooperatives have also been instrumental in bridging the social divide of caste, creed, race, religion & language at the villages, by offering open and voluntary membership.

The dairy cooperatives have been successfully propagating the concepts of scientific animal husbandry & efficiency of operations, which has resulted in low cost of production & processing of milk.

The movement has been successful because of a well-developed procurement system & supportive federal structures at District & State levels.

Dairy Cooperatives have always been proactive in building large processing capacities, which has further propelled growth of milk production.

The dairy cooperatives are among those few institutions in India, which still cherish a strong Cooperative identity, values and purpose. They still boast of idealism & good will of members and employees.

The dairy cooperatives have removed the poor farmers of India from the shackles of agents & middlemen and provided an assured market for their produce. As these are the institutions run by farmers themselves, it has also resulted in fair returns to the members for their produce

Dairy cooperatives have been able to create a market perception of honesty & transparency with their clean management

Achievements of GCMMF

2.8 million milk producer member families

13,759 village societies

13 District Unions

8.5 million liters of milk procured per day

Rs. 150 million disbursed in cash daily

GCMMF is the largest cooperative business of small producers with an annual turnover of Rs. 53 billion

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The Govt. of India has honoured Amul with the “Best of all categories Rajiv Gandhi National Quality Award”.

Largest milk handling capacity in Asia

Largest Cold Chain Network

48 Sales offices, 3000 Wholesale Distributors, 5 lakh retail outlets

Export to 37 countries worth Rs. 150 crores

Amul Brand Building

GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50 sales offices spread all over the country, more than 3,000 wholesale dealers and more than 5,00,000 retailers.

AMUL is also the largest exporter of dairy products in the country. AMUL is available today in over 40 countries of the world. AMUL is exporting a wide variety of products which include Whole and Skimmed Milk Powder, Cottage Cheese (Paneer), UHT Milk, Clarified Butter (Ghee) and Indigenous Sweets. The major markets are USA, West Indies, and countries in Africa, the Gulf Region, and [SAARC] SAARCneighbours, Singapore, The Philippines, Thailand, Japan and China.

In September 2007, Amul emerged as the leading Indian brand according to a survey by Synovate to find out Asia's top 1000 Brands.[7]

Products

Amul's product range includes milk powders, milk, butter, ghee, cheese, curd, chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns, flavoured milk, basundi, Nutramul brand and others. In January 2006, Amul plans to launch India's first sports drink Stamina, which will be competing with Coca Cola's Powerade and PepsiCo's Gatorade.

In August 2007, Amul introduced Kool Koko, a chocolate milk brand extending its product offering in the milk products segment. Other Amul

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brands are Amul Kool, a low calorie thirst quenching drink; Masti Butter Milk; Kool Cafe, ready to drink coffee and India's first sports drink Stamina.

Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy Federation Marketing Award for 2007

Mascot

Since 1967 Amul products' mascot has been the very recognisable "Amul baby" (a chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and product wrappers with the equally recognisable tagline Utterly Butterly Delicious Amul.The mascot was first used for Amul butter. But in recent years in a second wave of ad campaign for Amul products, she has also been used for other product like ghee and milk.

Advertising

An Amul butter ad on Pakistan's Kargil War fiasco. The image shows the "Amul baby" in between George Fernandes and Atal Behari Vajpayee.

Its advertising has also started using tongue-in-cheek sketches starring the Amul baby commenting jovially on the latest news or current

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events. The pun in her words has been popular. Amul outdoor advertising uses billboards, with a humorous take on current events and is updated frequently. The Amul ads are one of the longest running ads based on a theme, now vying for the Guinness records for being the longest running ad campaign ever with Smokey Bear. Sylvester da Cunha was the managing director of the advertising agency, ASP, that created, in 1967, the campaign.

Rivals

The success of Amul resulted in similar organizations being setup by state governments throughout India, most of which had reasonable success. Examples are Milma in Kerala, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, K.M.F (Nandini) in Karnataka, Sudha in Bihar, Omfed in Orissa, saras in Rajasthan, Parag in Uttar Pradesh, Verka in Punjab, Aanchal in uttaranchal, Vita in Haryana and others.

Other co-operative rivals of Amul include National Dairy Development Board (NDDB) (with its Mother Dairy and Sugam brands). With Amul entering the sports drink market, its rivals now include Coca Cola and PepsiCo.

In popular culture

The establishment of Amul is also known as White Revolution. The White Revolution of India inspired the notable Indian film-maker Shyam Benegal to base his film Manthan (1976) on it. The film starred Smita Patil, Girish Karnad, Naseeruddin Shah and Amrish Puri. The film itself was financed by over five lakh rural farmers in Gujarat who contributed Rs 2 each to the film'š budget. Upon its release, these same farmers went in truckloads to watch 'their' film, making it a commercial success.[10][11], the film was chosen for the 1977 National Film Award for Best Feature Film in Hindi. The Amul success story is taken up as a case study in marketing in many premier management institutes across the world.

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The White Revolution ushered an era of plenty from a measly amount of milk production and distribution. Aside from the great measurable success that this project was, it also demonstrated the power of "collective might". A small set of poor farmers of Kheda district in Gujarat had the vision and foresight to act in a way that was good for the society and not for the self alone.

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Every day Amul

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PRODUCT LIST OF AMUL

ITEM NAME DESCRIPTION

AMUL GHEE (SHELF LIFE 9 MONTHS)

12 x 1 Ltr.

AMUL GULABJAMUN (TIN)

12 x 1 Kg. (2.2 Lbs.)

AMUL GULABJAMUN MIX

30 x 200 Gm. (7 Oz.)

AMUL GULABJAMUN (TIN)

36 x 500 Gm. (17.5 Oz.)

AMUL MILK CHOC.24 x 20 x 18 Gm. (0.630 Oz.)

AMUL MILK CHOC.24 x 10 x 40 Gm. (1.40 Oz.)

AMUL CHOC. BADAMBAR

18 x 20 x 35 Gm. (1.22 Oz.)

AMUL F & N CHOC.24 x 10 x 40 Gm. (1.40 Oz.)

AMUL CHOC. GIFTPACK

30 x 230 Gm. (8.05 Oz.)

AMUL MILKLAIRS JAR

6 x 2.2 Kg.

AMUL MILKLAIRS 30 x 550 Gm.

collects 8.4 million litres of milk from 2.79 million farmers(many illiterate), converts the milk into branded, packaged products, and delivers goods thus achieving record annual sales turnover of $ 1504 million in 2008-09 making Amul as the largest food products marketing organization in India with more than 60 products.

Its supply chain is easily one of the most complicated in the world. How do managers at Amul prevent the milk from souring?

Walk in to any Amul or Gujarat Cooperative Milk Marketing Federation (GCMMF) office, and you may or may not see a photograph of Mahatma Gandhi, but you will certainly see one particular photograph. It shows a long line of Gujarati women waiting patiently for a union truck to come and collect the milk they have brought in shining brass matkas.

The picture is always prominently displayed. The message is clear: never forget your primary customer. If you don't, success is certain. The proof? A unique, Rs 2,200 crore(Rs22billion)enterprise. Organizationstructure It all started in December 1946 with a group of farmers keen to free themselves from intermediaries, gain access to markets and thereby ensure maximum returns for their efforts.

Based in the village of Anand, the Kaira District Milk Cooperative Union (better known as Amul) expanded exponentially. It joined hands with other milk cooperatives, and the Gujarat network now covers 2.79 million farmers, 13,328 village societies and thirteen district level plants (unions) under the overall supervision of GCMMF.

There are similar federations in other states. Right from the beginning, there was recognition that this initiative would directly benefit and transform small farmers and contribute to the development of society.

Markets, then and even today are primitive and poor in infrastructure. Amul and GCMMF acknowledged that development and growth could not be left to market forces and that proactive intervention was required.

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Two key requirements were identified.

The first, that sustained growth for the long term would depend on matching supply and demand. It would need heavy investment in the simultaneous development of suppliers and consumers. Second, that effective management of the network and commercial viability would require professional managers and technocrats.

To implement their vision while retaining their focus on farmers, a hierarchical network of cooperatives was developed, which today forms the robust supply chain behind GCMMF's endeavors. The vast and complex supply chain stretches from small suppliers to large fragmented markets.

Management of this network is made more complex by the fact that GCMMF is directly responsible only for a small part of the chain, with a number of third party players (distributors, retailers and logistics support providers) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by low consumer prices supported by a low cost system.

Developing demand

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money.

Introducing higher value products

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition of higher value products while maintaining the desired growth in existing products. Despite competition in the high value dairy product segments from firms such as Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the sequence in

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which Amul introduces its products is consistent with the core philosophy of providing milk at a basic, affordable price.

The distribution network

Amul products are available in over 800,000 retail outlets across India through its network of over 5,000 distributors. There are 65 depots with dry and cold warehouses to buffer inventory of the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

Umbrella brand

The network follows an umbrella branding strategy. Amul is the common brand for most product categories produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and condensed milk.

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an opportunity for the union members to cooperate in developing products.

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Managing the supply chain

Even though the cooperative was formed to bring together farmers, it was recognized that professional managers and technocrats would be required to manage the network effectively and make it commercially viable.

Coordination

Given the large number of organizations and entities in the supply chain and decentralized responsibility for various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a major role in this process and jointly achieve the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities.

Managing third party service providers

From the beginning, it was recognized that the unions' core activity lay in milk processing and the production of dairy products. Accordingly, marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third parties. These include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services.

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It is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously implement best practices across all elements of the network: the federation, the unions, the village societies and the distribution channel.

In developing these practices, the federation and the unions have adapted successful models from around the world. It could be the implementation of small group activities or quality circles at the federation. Or a TQM program at the unions. Or housekeeping and good accounting practices at the village society level.

More important, the network has been able to regularly roll out improvement programs across to a large number of members and the implementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office, be it a department or a branch or a depot to discuss their various quality concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a process check at the end to record how the meeting was conducted. Similar processes are in place at the village societies, the unions and even at the wholesaler and C&F agent levels as well.

Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of

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wholesale dealers, implementation of Zero Stock Out through improved availability of products at depots and also the implementation of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in terms of acidity and sour milk. (Undertaken by multi-disciplined teams, Kaizens are highly focussed projects, reliant on a structured approach based on data gathering and analysis.) For example, Sabar Union's records show a reduction from 2.0% to 0.5% in the amount of sour milk/curd received at the union.

The most impressive aspect of this large-scale roll out is that improvement processes are turning the village societies into individual improvement centers.

Technology and e-initiatives

GCMMF's technology strategy is characterized by four distinct components: new products, process technology, and complementary assets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by the GCMMF network. Village societies are encouraged through subsidies to install chilling units. Automation in processing and packaging areas is common, as is HACCP certification. Amul actively pursues developments in embryo transfer and cattle breeding in order to improve cattle quality and increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to employ Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internet and be assured of timely delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to information relating to markets, technology and best practices in the dairy industry through

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net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process.

Farmers now have better access to information on the output as well as support services while providing a better planning tool to marketing personnel.

Market research

Listen to the Voice of your Customer, find out what your competitors are doing, analyze the competitive landscape, discover and quantify new market opportunities. Geo Strategy Partners’ market research practice can help you identify and capture strategic market growth opportunities.

Geo Strategy Partners excels at custom projects that require a creative approach, strategic thinking, and access to key decision-makers. We provide clients a clear and comprehensive understanding of the competitive landscape and tools for strategic decision-making.

Amul’s formula: Focus on the client’s objectives; utilize sound classical research methodologies; add experienced consultants, proprietary analytical models, abundant creativity, and sound business acumen.

Geo Strategy Partners strives for insightful results high in validity, reliability, and objectivity. Amul focus on your strategic objectives, not just our deliverables.

Amul’s research approach

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Amul work closely with client executive teams to understand organizational objectives and the goals of the research. Methods utilized include desk research; data mining and modeling; executive interviews; qualitative and quantitative interviews with current/lost/non-customers; sophisticated analytics; analysis of distribution channels, competitor interviews; discussions with thought leaders and industry influencers. We synthesize findings and analyze data in a strategic decision-making framework and deliver key findings and recommendations in the format specified by the client.

Strategic Positioning & Planning

Geo Strategy Partners core competency is helping clients developing winning strategies to create and sustain a competitive advantage in a global and dynamic market place. Our Spatial Strategic Positioning ™ approach recognizes that neither customers nor competitors are static. We believe that traditional linear approaches to strategic planning are not effective in an environment of constant technological innovation, global expansion, and hyper-competition. Our non-linear spatial approach to strategy development focuses on aligning an organization’s renewable core essence with sustainable market demand.

We believe strategy should be market-driven and built upon sound market intelligence and insights. At the same time, we challenge our clients to discipline their market approach to those areas where they can achieve true competitive advantage. Our approach goes deeper than assessing our client’s core competencies, we strive to explore the essence of the organization’s competitive strengths and help them design a differentiating business model that is in alignment with constant customer demand. When the environment changes, our clients are not sent back to the drawing board, rather they draw on their core essence to seize the opportunity and get ahead of the competition.

Strategic planing

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Amul makes an important distinction in their practice between traditional strategic planning and strategic positioning. Strategic planning is a linear process, typically with a lot of known variables or assumptions in place.

There is still a role for traditional strategic planning. Amul’s strategic positioning process typically involves two steps:

a divergent exploration of core competences and enduring market forces followed by a more convergent analysis.

Marketing Strategy

At Geo Strategy Partners, Amul considers a great part of their value being derived from the fact that they are outside your organization looking in while you are inside your organization looking out.

Business Planning

Market Intelligence and Strategic Positioning and Planning need to be executed. Geo Strategy Partners provides comprehensive business planning services including facilitating executive decision-making and business plan development.

Market Entry

Whether it is entering a new sector in a familiar industry, or a new country market half-way around the world, we excel at helping our clients explore, analyze and develop strategies for entering new markets.

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Conclusion

Amul is the largest co-operative movement in India with 2.2 million milk producers organised in 10,552 co-operative societies in 2003-2004.

The country's largest food company, Amul, is the market leader in butter, whole milk, cheese, ice cream, dairy whitener, condensed milk, saturated fats and long life milk.

Amul follows a unique business model, which aims at providing 'value for money' products to its consumers, while protecting the interests of the milk-producing farmers who are its suppliers as well as its owners. Despite being a farmers' co-operative, Amul has given multinationals a run for their money.

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In butter, cheese and saturated fats, Amul has remained the undisputed market leader since its inception in 1955, by offering quality products at competitive prices. In other categories, Amul has nullified its late mover disadvantage through aggressive pricing, better quality, innovative promotion, and superior distribution.

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