Dairy key Amul expects to see an 8% development in revenues in this monetary year, driven by a surge in demand. “Our turnover in consumer products has increased 15-20% because people have consumed more of branded products”, mentioned R S Sodhi, MD, Gujarat Cooperative Milk Marketing Federation, which owns the Amul brand. The development would have been larger but the commodity marketplace saw a sharp fall since of the pandemic, he mentioned.
Sodhi mentioned they have set a target of doubling turnover to Rs 1 lakh crore by 2024 from Rs 52,000 crore at present by procuring more, processing more and promoting more. “This year we will be investing Rs 1,000 core and we will be investing around Rs 5,000 crore in the next five years in expanding milk processing infrastructure,” Sodhi mentioned.
In Maharashtra, exactly where Amul used to gather 10 to 11 lakh litres of milk a day, on the request of the state government throughout lockdown, the organization doubled the collection to 22 lakh litres. “We suffered little bit in commodity business because we got 15% to 17% more milk as the unorganised players and small dairies reduced their procurement so we started getting more milk,” Sodhi mentioned.
Amul is not worried about the commodity stock as it would be taken care of throughout summer time, he mentioned. A drop was noticed in the ice cream and fresh cream small business that catered to the hotels, restaurants and catering segment. Ice cream sales had gone down 85% but has created some recovery and is now down 50%. But Amul has compensated for this drop in commodities with development in the customer small business with maximum development coming from Tier II and III markets, Sodhi mentioned.
“Covid-19 has had a positive impact on organised packed food brand business. The positive impact will come in the next one or two years because of the shift to the organised branded and packed food. This shift is going to be irreversible,” Sodhi mentioned. “The shift was already taking place from unorganised to packed but this was at 7% to 8% but during Covid, it multiplied by two to three times and this is irreversible for brands which are trustworthy and affordable and Amul is meeting all the requirements,” Sodhi pointed out.
The marketplace was there for the taking with only a single third of the milk marketplace sector organised, he mentioned. “Amul would have to procure more, process more, market more and add more distribution points,” Sodhi mentioned. “The dairy industry is at `8 lakh crore at present, of which the organised is only Rs 2.5 lakh crore and Amul is only at `52,000 crore,” Sodhi mentioned.
Sodhi spoke to TiE Pune Chapter members and urged commence-ups that this was the ideal time to get into the meals small business as shoppers have been moving to organised meals and commence-up could make the ideal of it by creating firms. Around 90% of the meals small business is unorganised and get into this segment, he mentioned. “You can build a `100 crore brand by just being a city brand,” he recommended. Food small business is lengthy term and requires decades, brick-by-brick, brick and mortar and it can not be carried out just by sitting in front of laptops, he mentioned.
According to Sodhi, Amul made use of the lockdown period to make the brand, reassure shoppers and continue communicating with them, whilst other people withdrew from the marketplace. They hit the jackpot with the re-run of the Ramayan and Mahabharat teleserials and with the very same ad commit they have been in a position to get 3x advantage. The uncluttered, focused viewership and TRPs exceeding final year’s IPL got us 100x advantage, he mentioned.
“Amul is not a big ad spender and we never spend more than 1% of the turnover. Last five years it has only been around 0.8% and we don’t spend 8% to 10% like other organised food businesses. We spend minimal because we have an umbrella brand and have only one child to take care of,” Sodhi mentioned.
Amul is expanding facilities in Gujarat and beyond Gujarat. According to Sodhi, they are investing more in milk procurement infrastructure inside Gujarat and outdoors Gujarat and expanding distribution points across the nation. This is a game of provide chain efficiency, he mentioned.
After Gujarat, it was in Maharashtra that they have been generating the highest procurement with every day collection at 21 to 22 lakh litres milk. “We have four plants in Maharashtra at Pune, Nagpur and we are investing in two more plants in Maharashtra,” he mentioned. Amul has now turn out to be the biggest organised milk procurement agency in Maharashtra, he mentioned.
Amul is also investing in Punjab. According to Sodhi, Amul entered Punjab about 5 years ago and at present it is collecting 3 lakh litres of milk per day from 50,000 farmers in Punjab . “We are paying them the same price what a Gujarat farmer is getting. With our entry other players such as Nestle have to pay higher price. We may be buying around 5% to 10% in the geographies we are operating but when we enter the market, others have to pay more price,” Sodhi mentioned. Verka, the nearby brand in Punjab, was paying slightly reduce than them. Amul has its personal dairy plant at Khamano, situated among Ludhiana and Chandigarh.
“Besides that we have got three hired out private plants. One is near Chandigarh, one at Bhatala and one in Bhatinda. We are investing a lot in Punjab,” Sodhi mentioned. The initially investment will be in milk, pasteurized milk and then other items — paneer, curd and butter milk with maximum realisation coming from pasteurized milk, he mentioned.
Sodhi recommended farmers organise themselves into co-operatives if they want to develop larger and make brands. Farmer producer organisations are excellent for compact scale and compact geography, but if they want to develop larger — with checks and balances — then co-operatives is the ideal model for farmers, he mentioned.