Value Proposition
Vision
For the consumers to trust the brand, the brand should never “cheat” its customers. For a farmer
to believe in his customer, he should never feel “cheated”. Stressing on this philosophy, Amul
believed, “Marketing is not for business but for development of the most under-privileged
society of India.”
Communication/channel
Dr Kurien wanted to offer thousands of small dairy farmers centralised marketing and quality
control facilities. These were the missing links in the dairy economy at the time. The model,
which came to be known as the ‘Anand Pattern’, would operate at three levels. A dairy
cooperative society at the Village level would be responsible for collecting milk, the District
milk union to which the village dairy was affiliated procured and processed the milk, and the
State milk federation markets the milk and milk products.
The programme established milk producer cooperatives in villages and made modern
technology available to them. The objectives of this programme were to increase milk
production, augment rural incomes and cut out the middle-men. This allowed milk producers
to benefit from the profits of milk marketing. Due to its low capital requirement, short
operating cycle and steady returns, the dairy industry rapidly grew in popularity among
marginal and small farmers
The 1990s saw a lot of diversification in the ads with respect to themes as the Amul Girl
started to adore Bollywood like we do, with quirky ads based on movie posters. This
marketing push combined with supply chain strength, helped Amul transform India from a
milk-deficient nation into the world’s largest milk producer, surpassing the US in 1998. In
just 10 years, milk supply increased from 17.5 litres to 52 litres per 1000 urban consumers.
By the late 90s, Amul was owned by 12MM farmer members grouped into over 1lakh village
level dairy cooperative societies. The societies were grouped in 170 district-level unions
spanning 338 districts. The unions made up 22 state-level federations that marketed the Amul
brand.
CHALLENGES AND OVERCOMING STRATEGY
In 2016 Amul partnered with Amazon to cater to the demand for ghee of the overseas
audience.Export of commodities depends on international prices and in few cases it is not
viable for milk products given the volatility in prices and incremental costs. To scale the
global business, Amul began to set up production facilities outside India.
While most FMCG companies were showing single digit growth of 6-7%, Amul registered a
17.5% jump in FY 2017. In FY2010, turnover was around Rs.8,000 crore, which in FY2017
grew to Rs 27,043 crore at a CAGR of 20%. This is no mean feat, as it would outstrip global
brands like Unilever and P&G. The key factor driving its growth was the trusted brand it had
built.
Umbrella branding and no target segmentation strategy has worked very well for Amul – all
its products are under one single brand. And Amul has done well, sticking with the Butter
Girl for the last fifty years, against the advice of several advertising agencies. This kind of
consistency results in powerful customer acquisition economics. Amul’s marketing spend
would remain below 3% of its annual turnover all through 2018. For any business of this
scale, this ratio sounds “utterly, butterfly, delicious”. New age D2C brands have 20-30% of
their revenues as their ad-spend budget, which can learn a lot from Amul’s marketing
efficiency.
‘Never let a good crisis go to waste’ is a popular phrase and Amul has truly exemplified it.
Sensing changed consumption patterns and growth trends; it has quickly re-assessed its
product launch pipeline. In the first four months of FY21, it has launched an astounding 33
new products, the highest in a quarter.
To ensure that there was no supply disruption, it paid casual workers Rs. 100-125 extra and
gave distributors an extra 35 paisa incentive per liter of milk. It also made food and stay
arrangements for workers inside dairy plants to avoid any labor shortages. Fear was assuaged
by providing warm drinking water and Ayurvedic medicines to its workers.
