Amul Will Become India’s Most Prominent Global Brand: Jayen Mehta
How did the recent hike in milk prices impact your margins? Are more price hikes on the cards?
The price hike was done last year. If you look at the last four years, producers were severely affected during the pandemic and input costs also increased. We had to find a way to compensate the producers.
Price hike to the consumer becomes income to the producer because if you spend Rs 100 on Amul products, Rs 80-85 goes back to the producer. This is where we must walk the tightrope. Over four years, we took only six increases in the price of our largest selling toned milk, so we are still way below inflation over a long period.
Exports grew over 145 per cent in FY22. What are Amul’s overseas expansion plans?
Amul has created a huge market for its commodity and consumer products globally. Today, we export to almost 50 countries. We are getting unprecedented volumes, and the government of India, through the PLI (production-linked incentive) scheme, is also supporting brand-building activities in international markets.
We hope to gain a stronger foothold globally. We have identified the top 100 cities in the world and are focusing on developing each of these markets. In the next decade, India will produce 30 per cent of the world’s milk compared to 22 per cent now. Once India has this chance to become the dairy to the world, Amul will be the most prominent global brand name.
Tell us more about your expansion plans in the southern region.
The southern market is one of the most organised. The number of people consuming loose milk versus packaged milk is very high. We look at this market from two angles. First, if we can procure milk in the region and second, if we can sell it there. We are working very hard in Andhra Pradesh and Telangana to procure milk. We just announced our dairy plant in Hyderabad. We currently sell more than three lakh litres of milk in that region. We plan to expand that capacity. We have been operating in north Karnataka for over seven years now. People want Amul products. They know the brand, and now we will endeavour to make, pack and sell milk closer to them. Very soon, you will also see the Amul launching in Chennai.
What does the recent uproar in Karnataka tell you about the cooperative business, especially in the dairy sector? Why this hesitancy to compete in a free and open market?There is no hesitancy. Amul works closely with every dairy cooperative in the country. We’ve been packing ice cream in plants in Karnataka for the last 25 years. When they had surplus milk and no market, we bought as much as 5,000 tonnes of cheese in 2021 worth more than Rs 200 crore. The same applies to Tamil Nadu. Last year, when there was a shortage of fat in the country, we supplied white butter there. Kerala needed milk powder and we provided it. All the dairy cooperatives of India have been born out of the Amul model. We share a very close linkage and bondage with them.
Amul’s diversification beyond dairy in the past failed to capture any notable market share. What are some lessons from this experience?
The reason for our diversification, for example, in chocolates, was the farmers’ interest. Multinational chocolate companies exploited the cocoa bean producers in South India. Amul entered this space. When Campco (Central Arecanut and Cocoa Marketing and Processing Co-operative) in South India was formed, we started buying from them.
The metric of success is not just the sales of our products or market share. Due to our foray into this category, the cocoa bean producers got a reasonable price. This is where the overall impact must be seen. Today, we are the largest brand of dark chocolates in India. We expanded our capacity by five times in 2018. It runs at 100 per cent capacity and we plan to double it.
In the beverages space, we launched ‘Seltzer’ along with dairy-based and real fruit-based products as well as a cola without caffeine or phosphoric acid. These are some concepts we introduced in the country. We are not directly pitting ourselves against brands like Coca-Cola or Pepsi because the products differ. The benefit we give to our consumers is a guilt-free indulgence and they have been catching up well.
In the frozen portfolio, the pizzas helped us understand that consumers want ready-to-eat products. We now have frozen parathas and french fries. We set up a plant to manufacture this, which sources potatoes from farmers. The plant was commissioned six months ago and is running at full capacity, and we are expanding its capacity by four times.
All diversifications come not just with learnings but also help form connections with the farmers, which is more important to us.
How do you keep your taglines or icons such as Amul Girl relevant in a fast-changing marketing landscape?
The Amul Girl has been the best way to connect with the masses, and she seamlessly adapted from hoardings to social media. We do four to five weekly articles, and it is not just about advertising on social but creating conversations as well. We have 13 unique social media handles in different languages.
Our campaigns ‘Amul Taste of India’ and ‘Amul Doodh Peeta Hai India’ are iconic. Our strength is consistency. We will not change the campaigns and these taglines. We spend less than 1 per cent of our turnover on advertising, whereas others spend 5-12 per cent of the turnover on brand building. Our currency is not milk; it is trust. The trust of millions of producers and a billion consumers, keep this brand growing.
