FMCG – Dutch Uncles

B2B Aggregators Disrupting the FMCG Distribution

Shalmoli Sarkar — Thu, 21 Apr 2022 09:42:15 +0000

The independent grocery store colloquially known as the Kirana store is a vital channel for FMCG companies also forming the bedrock for the economy, and supporting the livelihood of millions of households. Our lives now intertwined with technology have simplified tasks that earlier were cumbersome. Right from ordering food, clothes, and medicines within a click to fintech apps disbursing loans with the least paperwork, it is evident that technology has made our lives comfortable. But, sadly the influence of technology on the B2B FMCG distribution is less. According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

A supply chain full of bottlenecks, inefficiency, and inconsistency

The slower pace of the small grocery stores can be blamed for its fragmented market system. About 90 percent of India’s FMCG operates in unorganised channels, which comprises a million individual distributors, and wholesalers who reach over 15 million mom and pop Kirana stores serving millions of Indian consumers. With the rapid growth of e-commerce and modern retail formats, it is likely, that the fragmented or unorganised channels made of small grocery stores and independent distributors, and wholesalers will lose ground. There are several inefficiencies and bottlenecks in the supply chain process originating from small and multiple intermediaries that service the same routes and same retailers, frequently with partially loaded trucks. The distribution system is riddled with manual processes which are slow, inefficient, and inconsistent.

Besides this, there lies a challenge for credit. Small stores are cash strapped leaving them dependent on purchasing goods on credit and eventually keeping a limited range of products as compared to modern retail stores resulting in a shift of shoppers. The increasing channel conflict on pricing general trade, e-commerce, and modern trade lowers the price of products in turn benefiting the end consumer but the pressure on margins on small retailers continues to build up.

In addition to this, the distribution is mired in an inflexible supply chain where the sales plans to delivery routes alter dynamically once or twice a year. This provides no room for growth for agile reallocation of resources and with the growth of modern retail stores, the small grocery stores become burdened with higher costs to serve.

Witnessing the challenges in the supply chain the FMCG companies will attract a digital disruption that will help these companies to track, analyse and improve sales and distribution at these small outlets. They need data for outlet-level information and real-time insights on market trends that can help build their strategy.

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According to a report by Nielsen, over the past decade, India’s 6.6 million network of small grocery stores is growing at a slower pace than the overall consumer market.

B2B aggregators are bringing in disruption

A majority of the B2B aggregators witnessed that the FMCG distribution space is highly unorganised and a wide gap exists between the company and the channel partners. Aggregator platforms like Udaan, Xpand, and Creando are disrupting the FMCG distribution and changing how Kiranas operated in the past. These new-age ventures are a one-stop solution for providing an entire basket of products within a click and are empowering them through sales training and technology.

Below are how they are disrupting the conventional FMCG distribution:

Direct connectivity: These platforms help connect brands with retailers, and empower them through technology. It provides consulting to kiranas, smaller brands, and FMCG brands in the area of business strategies, sales, and marketing.
Better inventory control: The platforms act as replenishment apps based on sales trends that auto-generate the order for a retailer, and reduce salesmen’s interaction with a retailer. It also provides information on inventory, products, and input on sales and management.

Providing credit: Aware of the fact that small retailers are cash strapped, the platforms can provide credit for buyers and sellers and also offer the facility for doing hassle-free transactions online. They have partnerships with other financial institutions to extend credit facilities on its platform.
Predicting perishables: Perishable items like vegetables or fruits, have a short shelf life but using predictive analytics these platforms can accurately predict the demand for various categories of food and non-food items and source the right supplier.

Fair price: The emergence of e-commerce and most FMCG brands going D2C are attracting consumers with deep-cut discounts and slashed prices, thereby creating channel conflict. The buyers in an offline wholesale market are unsure if the products are sold at the right price. B2B aggregators ensure fair prices, reliability, predictability, and quality. The price is fair for everybody since the retailers are not under the clutches of middlemen making the entire transaction reliable.

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Dabur and Indian Oil: Channelising Direct-to-Home Sales the Rare Way

Shalmoli Sarkar — Tue, 08 Mar 2022 08:35:12 +0000

India’s first homegrown ayurvedic FMCG brand Dabur has recently announced its rare partnership with energy provider Indian Oil. Through this partnership, Dabur will leverage the 14 crores strong network of Indane LPG consumer households across India for its direct-to-home sales. Under this partnership, Indian Oil’s Indan LPG distributors will act as the retail business partners for Dabur and sell the entire Dabur range of products to the Indane LPG consumers that will strengthen and deepen its reach across urban,semi-urban, and rural areas. This unusual D2C route will enable convenience and ease of buying through technological and system integration to provide seamless service to the value chain.

Dabur’s direct -to home sales finds potential in Bharat consumers

What is tempting for Dabur or other FMCG brands to opt for direct-to-home sales is the profit margin involved in this channel. Capitalising on the trend of e-commerce, most FMCG brands have begun delivering their products directly to the consumer’s doorstep and have reported an 88 percent rise in year-on-year consumer demand from the past years. In the coming years, D2C will be a popular business model that will find more relevance.

Partnering with the LPG network of Indian consumers is a strategic move for Dabur to establish its presence and bolster its network in the rural. Ever since the outbreak of the covid, Dabur has been witnessed continuous rural growth that surpassed urban growth in the third quarter of 2021. The rural growth for Dabur stood at 7.5 percent (in terms of value growth in Q3 FY 2021-22), while the urban growth stood at 2.6 percent. In the second covid wave, specifically in the Jan-Feb-March quarter where the overall FMCG industry shrunk by 2 percent but rural registered a 1 percent growth during the troubled times. The infections of covid did not spread to rural areas as much as the cities.
A majority of Dabur’s product consumption comes from rural India which accounts for 45 percent and is always 2 to 3 percent higher than the urban growth rate. Post pandemic rural consumers have shown adoptions to branded FMCG products in the healthcare space which was earlier absent. Dabur’s chyawanprash, Pudin Hara, Honitus, Lal Tail, and the multiple brands in the consumer health space has a consumer base, leveraging which the brand now wants to grow its brand ‘Real’ that was earlier limited to fruit juices and nectar. Under the brand ‘Real’ the brand has created three sub-brands called Real Fruit Power, Real Milk Power, and Real Health focussing on value-added dairy and fruit beverages. Under Real Health they are launching a host of healthy snacking options such as Chia seeds and roasted pumpkin seeds. Also, government schemes such as MNREGA and rural employment are ensuring more disposable income.

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A majority of Dabur’s product consumption comes from rural India which accounts for 45 percent and is always 2 to 3 percent higher than the urban growth rate.

What lies ahead for the startups in snacking and smaller FMCG and beverage brands?

In the reality show, Shark Tank India we have witnessed several snacking startups, health beverages, and Ayurvedic foods are focussing on health and pitching for investments. The FMCG space is no longer occupied by the big companies and brands that have always been around. The covid year has made the masses realize the importance and potential of running their own business and saw a sudden increase in homegrown brands that promise to deliver chemical-free, all-natural FMCG products. The COVID educated, environmentally aware consumer base shifted their loyalty from big brand names to smaller newer brands and products. Therefore, smaller FMCG companies or startups should not shy away from serving the rural and semi-urban due to their low-income levels. There has been an evolution in the lifestyle of Indians across the semi-urban and rural segments that have primarily contributed to the surge in revenue generated by the FMCG sector in the country, and hence there holds a faster and broader growth for the FMCG sector in rural India.
Selling FMCG products in rural India can be driven through word-of-mouth sales, groups, and recommendations from friends and neighbours, which Dabur currently will be leveraging through Indane’s customers. If one customer is aware of the convenience of getting Dabur’s products delivered at the doorstep then the entire neighbourhood will try to avail products through this facility.

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Home Grown Brands In The Pre-Independence Era

Shalmoli Sarkar — Sat, 14 Aug 2021 05:30:09 +0000

Much before India rode on the start-up bandwagon, the seeds of entrepreneurship began mushrooming during the reign of the British Raj. It was the Swadeshi movement back then when Mahatma Gandhi urged Indians to wear khadi fabric and make salt as it could weaken the British hold on India. Buying and selling British goods would only mean giving more monetary control and power to the Englishmen. In defiance of British rule, freedom fighters burnt heaps of British goods at the crossroads. Burdened under high taxes, and high prices of consumer products, Indian brands such as Amul, Mysore Sandal Soap, Boroline, Asian Paints, Keventers, Parle G and S Chand group emerged during the pre-independence era that rose to become timeless and iconic. There are many more such Indian brands. The Indian brands sought to bring economic freedom by reviving domestic products and manufacturing processes.

As India celebrates its 75th Independence Day, let us have a look at how such Indian brands have become a household name.

Swadeshi brands

The majority of the brands that took birth during the pre-independence era, were competing with British goods as a part of the Swadeshi movement. The brands latching on the patriotic sentiment developed consumer products that focussed on affordability and revived the old Indian remedies that were on the verge of extinction. One such brand is Dabur. Dr. S.K. Burman, founder of the Dabur brand, infused Ayurveda in its products. Allopathic medicines the British made were expensive. He developed small tablets that helped in digestion and began selling chyawanprash to boost the immunity of children. Those small tablets of digestion are today’s Hajmola.

Brands that are every generation’s favourite

In today’s era of Starbucks and Café Coffee Day, yet at a roadside tea stall, we would ask for a pack of ParleG biscuits. Biscuit – a sweet British snack people had mostly with tea was expensive for the Indian masses. In 1939, the Chauhan Brothers, deeply rooted in Swadeshi, felt it was their responsibility to sell affordable glucose biscuits to Indians after leaving their textile business since it included transactions with Europe. Today as well, in local train stations or crowded bus stops you will find people munching on a Rs 5 pack of ParleG happily. ParleG became the first Indian FMCG brand to cross the Rs 5000 crore mark.

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Indian brands such as Amul, Mysore Sandal Soap, Boroline, Asian Paints, Keventers, Parle G and S Chand group emerged during the pre-independence era that rose to become timeless and iconic.

Timeless brands that withstood the test of time as well

Be it chapped lips, shaving blade cuts, dry skin, rashes, or any skin problems, we have our saviour Boroline. It is rare to find any dressing table of a Bengali household without that green tube. Started in 1929, by Gour Mohan Dutta the antiseptic dark green tube of boric acid, zinc oxide, paraffin, perfume, and essential oils was a tight slap to the British. The multiple uses of this antiseptic cream garnered immense popularity among Bengali women that also portrayed a strong protest against the British’s economic exploitation. Boroline has witnessed turbulent times and has exited through various phases. Amid the cut-throat competition of fancy cosmetic brands, the brand Boroline still stands relevant.

Iconic Indian brands

It is rare for any school student to say that he has never studied from an S Chand book. To reduce the penetration of foreign books in the market, in 1939 Shyam Lal Gupta began a publishing house to publish books written by Indian authors that are affordable. Similarly, brands like Mysore Sandal soap and Asian Paints began their expansion in India as exports were hampered due to World War II. The unique fragrance of Mysore Sandal Soap still is a favourite among Indians. Asian Paints, over time, has risen to become one of the paint giants of Asia.

Why have they been able to survive?

The Indian brands’ birth during the pre-independence times were associated with India’s freedom struggle. The brands instilled a sense of patriotism amongst the Indian masses that continued for generations to date. The pricing of these products has not undergone a steep rise. The product quality was maintained which bolstered the trust among Indians and earned its loyal customer base.

Learnings from the Pre-Independence Indian brands

For a decade, ParleG biscuits did not change the prices of biscuits even though prices of wheat, milk, and sugar increased. It adhered to its promise of selling affordable biscuits to the masses.
Indian brands from the pre-independence era exemplify not just nostalgia, but also longevity and consistency.
From the marketing side, the brands used two appeals, patriotism and family-oriented products. At a time when the purchasing capacity of Indians was low, Indian families preferred products that could be used by the entire family.

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Patanjali Ayurved, The Biggest Swadeshi FMCG Brand

Aakash Sharma — Sun, 08 Aug 2021 10:35:09 +0000

As per the latest records of the company’s finances, Yoga Guru-turned-entrepreneur Baba Ramdev led Patanjali Group has posted a massive turnover of Rs 30,000 crore. Patanjali Ayurved has left behind all the big companies in the Indian FMCG sector, with the exception of Hindustan Unilever Limited (HUL).

Patanjali Ayurved sells everything, from herbal toothpaste and cosmetics to noodles and jams. The FMCG giant is not lost on the latest technology either as it has signed agreements with several e-commerce giants, such as Amazon and BigBasket, to push online sales. Patanjali Group reportedly aims to become the most significant player in the country’s FMCG sector.

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In a recent press release, the Patanjali Group outlined that the company has created history by reaching a turnover of over Rs. 30,000 crore in the financial year 2021 at a time when the entire world is going through an enormous crisis.

The Successful Partnership between Ramdev and Balkrishna

While Ramkrishna Yadav, popularly known as Baba Ramdev, is the mascot of the multi-million empire of Patanjali Ayurved, his number two, Acharya Balkrishna, is the key operative in the company. Ramdev and Balkrishna founded the Divya Yoga Mandir Trust in Haridwar in 1996, and they set up Patanjali Ayurved in 2006. Ramdev’s pupils initially helped set up Patanjali Ayurveda as they loaned him seed fund for the company. Fast forward to 2012, and the company posted a turnover of $63 million, which by 2015–2016 had risen to $700 million.

Balakrishna, whose parents were Brahmins and Nepalese immigrants, now owns 94% of the company and is its Managing Director. Undoubtedly, he is a close aide of Ramdev’s. Balakrishna was also voted one of India’s 50 Most Influential People in 2020. According to Forbes India, Balakrishna is India’s third-youngest billionaire as of 2020, with a real-time net worth of $2.3 billion.

Selling Swadeshi and Marketing Nationalism

Before entering the business world, Ramdev established himself as the de facto Yoga Guru of India. He showed the actual value of this traditional art and his desire to bring it to the general public. With years in the making, Ramdev built the brand of Patanjali Ayurved on the heightened sense of Swadeshi, increasing popularity of yoga, and the inherent by-product of these – nationalism.

Over the years, Ramdev has transformed Patanjali Ayurved into an Indian multinational and one of the biggest FMCG companies based out of Haridwar, a critical religious spot for North Indian Hindus. To create his market, he spurred an awakening among the consumers with the call for Swadeshi nationalism to promote herbal and Ayurvedic products to counter the flight of money apparently “looted” by international MNCs operating in India.

And thus, his ascent into India’s most prominent business circles began as people overwhelmingly shifted to Patanjali’s natural and herbal products.

Today, the Patanjali Group is on track to becoming the most significant FMCG player in the country, set on overtaking Hindustan Unilever. The company crossed the Rs 30,000-crore revenue mark in 2020-21 compared to HUL’s revenues of Rs. 45,311 crore.

Patanjali’s Money Minting Subsidiaries

Patanjali acquired Ruchi Soya for Rs. 4,390 crore ($610 million) through bankruptcy proceedings in 2019. Ruchi Soya’s sales in FY 2021 were Rs. 16,318 crore, which accounted for 54% of Patanjali’s total sales for the fiscal year. On an annual basis, the increase in Patanjali’s revenue was 24.4%. Additionally, the company’s EBITDA margin increased by 122.27% to Rs. 1,018 crore, and Profit after Tax (PAT) increased 204.01% to Rs. 681.0 crore.

In FY 2020-21, with Patanjali Ayurved Limited’s turnover of Rs 9,783.81 crore, Patanjali Natural Biscuit (Rs. 65 crore), Divya Pharmacy (Rs 850 crore), Patanjali Agro (Rs 1,600 crore), Patanjali Parivahan (Rs 548 crore), Patanjali Gramodhyog (Rs 396 crore), Patanjali Group’s turnover increased by over Rs 14,000 crore.

What can entrepreneurs learn?

Aspiring entrepreneurs can undertake a multi-pronged strategy to ideate and scale up their business idea. They must plan expansively for the future to ramp up marketing spending, enter new categories, and predict a good market positioning, just like Patanjali has in India’s food, FMCG and wellness products segments.

While the story of Patanjali Ayurved and Ramdev’s business acumen seems rare, the practise of cashing in on sentimental issues and giving alternatives to monopolised sectors is common in the business world. From this story, new businesses and aspiring entrepreneurs must learn to make the best out of opportunities and give new options to consumers, and thus, write their own entrepreneurial story.

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Why is the Fruit-based Beverage Industry Growing in India?

Anju Nambiar — Thu, 15 Apr 2021 02:35:03 +0000

The fruit-based beverage industry in India has been growing silently. Innovation is driving the arrival of new and unique products in the market. The consumer demand for these products is high. There are two main reasons why fruit-based beverages have suddenly become popular with the masses:

Health & wellness conscious consumers are perceiving packaged drinks as safe choices over fresh fruit juices.
Sheer number of unique and innovative packaged fruit juices in the market with interesting ingredients and attractive packaging.

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Every year, the summers seem to be getting hotter than the last. This ever-growing demand has silently increased sales of beverage companies year on year.

What are the growth drivers for the fruit-based beverage industry?

The summer months are some of the best for the fruit-based beverage industry. Every year, the summers seem to be getting hotter than the last. This ever-growing demand has silently increased sales of beverage companies year on year.

Parle Agro, for instance, the makers of Frooti and Appy Fizz are already prepared for the highest demand yet in the Summer of 2021. They have already set aside 240 crores for marketing in 2021.

Soaring temperatures

Soaring temperatures are a major growth driver for this industry. Fruit-based beverage start-ups need to come up with refreshing products to capitalise on the high demand during the summer months.

Health-conscious consumer needs

Consumers have finally realised the need to keep away from sodas and colas. Organic, cold-pressed fruit juices are in high demand because they are viewed as healthier alternatives over fizzy sodas. Big FMCG companies have hurriedly launched a number of unique fruit juice products to get a sizeable chunk of this demand.

In fact, small juice brands have been acquired for large sums of money by big FMCG firms.

Raw Pressery, a Mumbai-based organic juice start-up was recently acquired by Wingreen Farms for INR 100 Cr. Although this deal was not very impressive, several other juice brands have recently been acquired by FMCG giants as the demand for healthy fruit-based beverages is increasing rapidly.

How MSME’s should respond to this growth?

With all the lockdowns and curfews in place, summer 2021 will see fewer people stepping out to buy a refreshing packed fruit drink. To get around this problem, MSME’s in the fruit-based beverage industry must think about launching their products online.

Since people will be stepping out less often, MSME’s can redirect the lost sales to an online channel.

Offering unique products with a healthy proposition

Consumer needs in fruit-based beverages are leaning towards fibre-rich, healthy product choices. Consumers are also interested in unique product offerings in terms of flavours and ingredients.

What’s in it for me?

The fruit drink market in India is evolving and start-ups in this sector need to have a solid marketing budget. Mainly because the competition from legacy fruit beverage brands is high and they are doing aggressive marketing to capture sales.

The challenge is that the summertime which saw high retail sales of packaged fruit beverage products has been impacted due to people stepping out less frequently.

To drive sales, fruit beverage start-ups need to go into online distribution. This is because customers still have a strong need for nutritious, refreshing, packaged beverages and are willing to purchase online.

Digital and social media marketing campaigns can drive sales. Attractive ad campaigns can help you connect with customers. A good example for this is ‘Paper Boat’, a Bengaluru-based packed fruit beverage start-up. This start-up gained immediate success due to its nostalgia-inducing marketing campaigns, flavours holding sentimental value to target customers, and attractive packaging.

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The Taste of India, Amul: Spearheaded the White Revolution of India

Naina Sood — Thu, 01 Apr 2021 04:30:11 +0000

“Coming together is a beginning, staying together is progress and working together is success” – Henry Ford.

The famous quote, which came from Henry Ford while he was sitting in his plush office in Michigan, United States, found its relevance in a remote village of India seven decades back. This story goes beyond a company or a brand. It is India’s inspiring narrative of resistance, empowerment, revolution, community team strength and leadership which gave rise to the 75-year-old legacy brand – Amul, the taste of India.

This historic brand, built on a basic cooperative philosophy with strong execution, is today credited for revolutionising the entire sector and a true inspiration for ‘dairy aspirants’.

Confronting the Status Quo

It all began from Anand, a small village of Kaira district in Gujarat, where dairy farmers operated at the mercy of contractors and middlemen, who controlled the milk marketing via a locally-owned diary — Polson Dairy. The farmers witnessed how they were compelled to sell their produce at throwaway prices to be further sold by Polson diary (where the milk was pasteurised) at huge profits to the Bombay (now Mumbai) government.

The discontent had been brewing for long. Fed up with the exploitation, the farmers decided to break free by taking the advice of Sardar Patel and Morarji Desai to demand to set up a cooperative society of their own. The demand was turned down by the government which led to the famous ‘milk strike’ called by farmers. Not a drop of milk was delivered across regions for almost 15 days, ultimately forcing the authorities to accept the same.

This marked the beginning of the Kaira District Co-operative Milk Producers’ Union Limited, Anand, in 1946 under Tribhuvan Das Patel, who became the founding chairman of the organisation and led it until his retirement in the 70s. It was in 1949, that late Dr Verghese Kurien arrived in Anand as a government employee to manage the dairy and stayed back to take the co-operative movement forward. More dairies were opened as the proven model of low capital requirement, short operating cycle and steady returns was replicated across various regions.

While the milk production and supply was streamlined, there was a problem of excess production which was solved by setting up a plant in 1955 to process all that extra milk into products such as milk powder and butter.

The duo was joined by dairy technologist HM Dalaya who brought in the expertise to take this proposition forward. Products like butter, cheese and baby food were churned out under the trio’s leadership besides the world’s first plant to manufacture milk powder from buffalo milk, creating history. Kaira Union introduced the brand “Amul” for marketing its product range. The brand name was handed over to The Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) in 1973. By then, Amul had become a brand name in its own right.

What began as a socio-economic movement to improve the conditions of farmers across the country led to curation of one of India’s strongest brands Amul with Dr Kurien as its captain.

“I am in the business of empowerment. Milk is just a tool in that,” said the man who revolutionised the Indian dairy industry by scripting Operation Flood. Dr Kurien served the organisation for almost 30 years before resigning from his chairmanship in 2006.

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The idea of having farmers own the brand went a long way in creating a sense of ownership and, in turn, responsibility for the product’s quality.

A ‘billion-litre’ Idea: Becoming a national ideal

GCMMF, which markets Amul milk and dairy products, had gained, and still holds, a monopoly over milk processing and distribution. It operates the country’s most modern and sophisticated dairy plant at Gandhinagar, Gujarat besides 30 other plants across Delhi/NCR region, UP, Maharashtra, Rajasthan Madhya Pradesh, Assam, Chattisgarh, Jammu and Kashmir and Jharkhand.

It sells around 4-5 lakhs litres of Ultra-high-temperature processing (UHT) milk and other value added products per day and forecasts this demand to continue growing at 25%. The UHT products have enabled Amul to position itself as the market leader in the packaged milk segment without the need of maintaining cold supply chains.

Amul’s current milk product range has some 40 products. The brand owns 85% share in the butter market, 65-66% share in cheese, 88% market share in butter, 63% share in infant milk, and 45% market share in dairy whitener. Amul products are sold in over 40 countries, some of which include the United States, Singapore, United Arab Emirates, Japan, China, etc.

Amul isn’t just a legacy. The brand is a disruptive innovator with a unique model solving purpose and profit. The idea of having farmers own the brand went a long way in creating a sense of ownership and, in turn, responsibility for the product’s quality. Branding gave a farmers’ cooperative a quasi-commercial strength, enabling it to adapt to competition. This is unlike any other corporate company in the world where the brand is owned by villagers who contribute tirelessly to their cooperative company.

The business model of the Amul is simple: sell-profit-reinvest. Amul was a three-tier cooperative structure:

● At the village level, there are cooperative societies producing milk.

● At the district level, there are milk unions with processing centres.

● At the state level, there are milk federations responsible for consolidation.

The end price of Amul products are decided by GCMMF and marketed further.

This transparent model leads to maximum returns for the suppliers – the farmers, who get remunerative prices for the milk sold besides a share in the company’s profit at the end of the year.

The earnings from the sale of all the products are plugged back into the production, eliminating all the intermediaries. Hence, sell-profit-reinvest. This makes Amul the brand name of 2 million farmers. Having no owner makes the Amul saga special and unique.

Seeping Into the ‘Dairy’ Routine

Faith and trust is not an overnight job. It would come from decades of consistent messaging. This brings us to the key ingredient to Amul’s success — consumer trust. Consumers have blind faith in Amul. They know this brand will not cheat them in any way. The perception of the brand is such that it is consumed by a millionaire living in a big city as well as by an autorickshaw driver in a small town.

This is the reason why it doesn’t believe in market segmentation, the opposite of what is interestingly taught in B-schools’ books. How has this trust been built? The foremost reason being the sheer quality and authenticity of the products. Besides being the best-in-class, the products are affordable which has helped the brand seep into almost every households’ kitchen. It has been offering value for money since the very beginning when consumer’s had a limited purchasing power. Its unique transparent model with a strong distribution strategy helps it keep the pricing low.

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 which Amul introduces its products is consistent with the core philosophy of providing its product, say butter, at a basic, affordable price to appeal the common masses. This helped the product to create its brand image in the household sector of the society.

Amul’s Contemporary Twist

Another reason for the huge success of Amul as a brand is its diversification into numerous dairy products. This brings out a very important aspect of the brand which has managed to keep up with the changing trends and market demand over the years and placed its products smartly on the shelves.

In 2010, RS Sodhi, who had worked with the company for almost 30 years, was promoted to managing director. The period was crucial as the dairy giant was beginning to lose its touch in the market and going into a hibernation mode. It was time to wake up the giants.

Sodhi applied changes across the supply chain, exports markets and new launches which made Amul grow 2.5x in 5 years (2015), the most in its entire history. This was evolution of Amul 2.O, with a contemporary twist. From ice-creams to mozzarella cheese, Amul has built a diversified product range besides its usual anchor products —milk, butter, curd and paneer, which are its cash cows as they drive the bulk of revenue and profits. In FY19, Amul launched value-added products such as flavoured milk, camel milk, fruit based Amul Tru (combo of milk and fruit) and new range of kulfis. It also launched the Happy Treats brand with products such as french fries, aloo tikki and hash brown.

By the early 2000s, Amul had launched ‘Real Ice-cream’, branded yoghurt, mozzarella cheese, coffee products, tapping into the growing and changing consumer demand. It has been constantly innovating and investing its branded dairy product portfolio along with adjacent food categories. It plans to expand its presence in packaged sweets beyond Gulab Jamun and Rasmalai. It also entered the branded edible oils segment last year with its launch of ‘Janmay’ brand with five variants.

However, it is not that all its products have been well-perceived. For instance, Amul chocolate and pizzas have failed to penetrate the markets, including international.

Despite these glitches, Amul is a winner in each and every category on Indian dairy business—revenue generation, turnover, product categories—Amul beats its deep advertising pocketed-competition by a huge margin. This has been made possible with the brand’s penchant for quality at affordable prices.

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Amul has been offering value for money since the very beginning when consumer’s had a limited purchasing power. Its transparent model with strong distribution strategy helps it keep pricing low.

Staying Ahead in the Game: Tackling Competition

One of the main reasons why Amul has secured its standing in the overall dairy market against its competitors is its large audience. Amul is perceived more as a local brand in various regions of India. Instead of competing with national or international brands, it focuses on local and hyper-local markets.

Also, this line between a local and an international brand has faded over the years with both occupying the front shelves with equal weightage. The preference of the former over the later has changed. Rather, consumers seek local brands, which are at par with international brands in terms of quality, pricing and ingredients. In this scenario, Amul fits all categories.

It is perceived as a brand of ‘my region’ or ‘my city’. Therefore, its competition is not multinational brands but regional and city brands. Even premium products like cheese are not restricted to urban markets anymore.

The rural consumer wants to buy the same but in a smaller pack size and Amul has tapped this opportunity at the back of its humongous processing capacity and distribution team, which is ever-growing.

‘Taste of India’, and the World

Amul started shifting its focus towards the international market around 2008 to fuel its revenue growth with packaged consumer products (butter, cheese, ghee) and commodities (milk powder and white butter). The confident move was backed by the trust it had built over the years.

In 2016, Amul partnered with Amazon to cater to the demand for ghee of the overseas audience. To scale the business, Amul began to set up production facilities abroad (US and European market) for ghee, shrikhand and other products.

The results were extremely positive reflected in its growing exports numbers. This strategy helped Amul outpace global FMCG brands like Unilever and P&G which had a growth rate of 6-7%, in contrast with 20% CAGR of Amul, between 2010 and 2017.

The ‘Utterly Butterly’ Genius Idea: Iconic Amul Girl

Amul is available, affordable and visible ! Amul’s branding game has been extremely strong, yet simple. It is inspiring to see how ‘Taste of India’ and ‘Amul Doodh Peeta hai India’ brought in the sense of nationalism in them and became an ideal.

This brings us to the brand’s lucky charm — The Amul Girl, who is 56 years old today and hasn’t aged a day! The little girl in a polka-dot dress, long lashes, blue hair and a ribbon has managed to steal everyone’s heart with her innocence, without polarising her audiences. Even Prime Minister Narendra Modi didn’t shy away from thanking the brand for its humour in 2018, when the little girl wished him birthday.

The (original) Amul Girl was created by creative head Sylvester daCunha (daCunha Communications) and art director Eustace Fernandes, with the suggestions of Dr Kurien in 1966. The creation was later taken over by his son Rahul da Cunha in 1994, who along with copy writer Manish Jhaveri and Jayant Rane, the artist, have been keeping the magic alive.

The mascot has remained relevant even to date. Reason — It connects everyone. Some people connect with satire, some with politics, some with humour, some with celebrities and so on. Amul found a common ground with its mascot, which remained consistent and crisp all these years. The narrative continues to be current and contextual displayed in a way that has always captured the imagination and attention of every Indian irrespective of age, gender, or religion.

The brand’s overall advertising cost is merely 1-4% of its revenue unlike other brands who have around 20-30% of revenue as their ad-spend budget. Amul has stood strong on its umbrella branding-meaning, it markets all its products under a single name which leads to this low costing.

Besides the traditional newspaper advertising and hoardings, the brand has been balancing the new-age digital medium with fresh creatives. However, it still holds its strength and belief in the former and rightly so. It rather uses its social media for listening to its customers and solving their queries.

Amul’s brand story is inspiring in every way. Even today, despite being the dairy king, it refuses to rest its laurels with new innovations, tech penetration, even more robust supply chains and ever growing distribution channels. It is a true remarkable story of a traditional cooperative model in today’s tech-driven global system.

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