Can a company ever transcend beyond its role and represent voices, hopes & dreams of a nation? Well, Gujarat based Amul has managed to do all of that while also being the biggest dairy company in the country.
For decades now, AMUL has shaped the FMCG sector, helping Indian farmers thrive, while also catering to the needs of its ever demanding customers.
What is Amul planning next & how has 2020 impacted it? Dr RS Sodhi, Managing Director of Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers in Gujarat spoke exclusively to NewsCaravan. In a detailed conversation Dr Sodhi spoke of his vision for the company & why it continues to stand the test of time.
Q) Amidst the lockdown, one sector that benefitted is that of pre-packaged food, can you explain to us in detail how COVID impacted the sales of products from Amul?
Dr. Bali, You’re right, during COVID and lockdown pre-packaged food section has taken a growth, during COVID and lockdown no one has refused the consumption of food, the share of eating out has shifted, from 10 to 20% eating out at mess, canteen, hotel, restuarants, parties or weddings, people started eating everything at home.
Everybody was taking a lot of interest in buying food, cooking, eating, serving & showcasing this on WhatsApp & Instagram, so food was the talk of the town.
So the consumption of food increased & the reason why sales of packaged food increased is because when we eat outside, cheap and loose ingredients are used, be it paneer, ghee, sauce, flour, spices or anything else for that matter, but when you want the same product at home, you want to buy packed food.
Also, during the pandemic, trust on packaged food increased, secondly you want to buy a trustworthy brand because when you want for your own consumption, when you want to create your cheese or paneer recipe, you want to use the best ingredients.
Best ingredients are always associated with the best, trustworthy brand which are affordable and available. AMUL met all these parameters, we use quality products, we never use synthetic or artificial ingredients.
AMUL is a very trustworthy brand for the last 74 years. AMUL is an affordable brand. AMUL products were available without any disruption during this lockdown & AMUL was visible on mass media and that is why it got an average gain of 15-20% growth, some categories registered 30-40% growth like paneer, cheese, tetra-pack milk etc got much more or chocolates grew 30-40%, some categories like ice-cream declined drastically because people weren’t going out, now it has come equal to last year.
Q) How is team AMUL functioning amidst the pandemic? Has the procedure to procure raw products and process them changed since March?
AMUL’s supply chain is not like other food companies that start at the factory and end with the retailer. We daily buy around 25 million litres of milk from farmers from 18,500 milk collection centres through 10,000 milk tankers.
Firstly, we knew milk was essential, so it was exempted, the only thing was how to communicate this, so first thing when the lockdown was announced on March 24th, we communicated to our supply chain partners vis-a-vis farmers, we assured farmers that milk will be collected twice a day without any decline in price, in fact we got 15-17% more milk during lockdown because small players, unorganised players, ice-cream suppliers stopped milk procurement so that much extra milk started coming to us.
Farmers were communicated about the precautions and safety measures to be taken, those were communicated to them and then we also communicated to our logistics partners, milk tankers & truck drivers that milk is exempted, we arranged full day meals as restuarants & dhabas were closed, we got all the permission from respective authorities.
There were some problems that we faced at Goa & Punjab, but we spoke to the concerned administration. Local administration & police helped us a lot. We also communicated to our workers, that you are under exempted category, no doubt it’s risky, but it is your job for the nation, we gave 30-40% incentive also beside their salary.
We also communicated to our distributors & retailers also that you will continue to get milk and other dairy products without any interruption. We communicated to consumers also that tomorrow morning you will get milk, curd or buttermilk without any disruption. There was not a single minute disruption in our supply chain.
Q) Is AMUL planning on launching any new products since lockdown gave an impetus to sales for the company?
Dr Bali, actually, launching new products is not a new thing in the dairy industry. For the last few years, AMUL has been launching products every month but during COVID the speed doubled.
Panchamrit, Turmeric milk or Tulsi milk, Ginger Milk these are the number of products. During COVID or lockdown we saw speed of launching milk products has increased. Our office didn’t close for a single day We are in a small town like Anand and everybody is staying around office only.
Q) Amidst the raging debate over Farm Laws, how is AMUL aiming to consolidate the interests of farmers?
See what are the farm laws, any farmer can sell his produce to anybody from anywhere at anytime and any buyer can buy the farm produce from anybody anywhere, if required they can make advance purchase, it’s a simple thing, this happens in services as well. India had a shortage of food when the earlier laws were enacted and this laws have have outlived their life.
Today, the combined value of milk is ₹ 8,00,000 Crore, which more than the combined value of wheat, paddy and sugar together and already farmers are free, he can sell to anybody. Anyone can buy milk from anywhere.
I think it will bring competition. It is good, it will bring more competition and it will dictate efficiency from all the players who are already there, if you gain monopoly you may not be efficient. There may be some initial hiccups, I don’t think it is going to harm farmer or the consumer.
People in the industry will have to become more efficient. Let me tell you for wheat, paddy and other farm produce there are little over 7000 APMCs but for milk there are 3 lakh mandis. For milk, every village is a Mandi. I think people shouldn’t be apprehensive. It will be good for them.
Q) AMUL dairy products are known for their high quality, can you explain how your company painstakingly maintains its high standards?
See, AMUL has been around for last 73 years, the one thing we haven’t changed are our quality standards, people buy AMUL because they have blind faith in quality of AMUL products and they know AMUL will not cheat them.
They know AMUL will not replace its ingredients with cheap, synthetic ingredients. If you see our recipe for butter or any product, we haven’t changed it for the last 35 years just to reduce the cost of production.
Most of the FMCGs, once the product becomes successful, next thing that’s done is reduce cost of production by replacing expensive ingredients with cheap, synthetic ingredients, they think costumers won’t come to know. But our Founder-Chairman Dr Verghese told us one thing, “Always think costumer is smarter than you, don’t showcase customers & don’t cheat customers”
We check the quality of milk at four locations. First at village level, when the milk comes, we have installed electronic milk testing equipment, milk is rejected if it doesn’t meet the requirements. Milk is then tested when it reaches dairy plants so that there is no adulteration en route. Third test is done when milk is going to be packed. Fourth is when the product is released for marketing to ensure during storage nothing has happened.
Q) Of the biggest mascot of the brand is the AMUL girl and her cartoons; in your opinion why are the masses so connected with the AMUL Girl and her quirky takes on any subject?
Firstly, you have to understand- why this campaign? It’s a brand building exercise. It started 55 years back with Mr Sylvester daCunha, his son Rahul daCunha is now handling it.
We were told we have to build the AMUL brand, but we didn’t have much money to spend. We were asked to come up with a strategy and a media plan to build the brand. AMUL budget on advertising is less than 1% & for the last 10 years it has been 0.8%.
Just by spending peanuts we have taken the brand to the top of the mind, where ever you go, when you say you’re from AMUL people instead of talking about the product, talk about the campaign. You give me example of any other brand be it Maruti, Sony,Tata or Honda, where people talk about the campaign and then the product or the company.
Now coming to this particular campaign, we believe in consistency, any message, anything you do, whether, it is product recipes or communication or business philosophy, there has to be consistency.
The campaign was created 55 years back & the Butter girl comments on anything and everything regarding India, Bollywood, Hollywood, Politics, Sports, anything. Butter Girl knows the mood of the nation, she is not afraid of anybody and she doesn’t favour anybody.
Q) AMUL is eyeing expansion in Southern India can you give us a sneak peek into AMUL’s plans to conquer markets in South of India?
AMUL is a brand that has its presence in North, East, West, everywhere. Our business comes from fresh products such as milk, dahi, buttermilk and paneer.
Somehow we have spent well enough in the West, we are a Gujarat based company, in the North we have gone up to Jammu, Srinagar where we have fresh products manufacturing facilities, in the East, we have plants to manufacture products. Somehow, we have not gone below Maharashtra for our fresh products.
Now we want to plan in big way in Andhra Pradesh. When it comes to milk production, Andhra Pradesh is like Gujarat – same milk quality & milk type, 60% is buffalo milk and there is no organised sector and Andhra Pradesh is well connected to major South Indian cities like Chennai, Bengaluru, Hyderabad & even Kerala.
Andhra Pradesh government is coordinating, cooperating with us and has welcomed us, that is why we have decided to go to Andhra Pradesh.
Q) After entry into Southern Markets, will AMUL also plan on global dominance in the sector of dairy products and FMCG?
We are expanding globally, India is the largest producer, largest and fastest growing market. We are investing 700-800 crore but the focus will be India.