Economics Project

THE TASTE OF INDIA

(Gujarat co-operative milk marketing

federation)

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 DAIRYING IN INDIA: A RETROSPECT

Dairying has been a part of the cultural life of our people since

time immemorial. In the ancient traditions of India, cow was & is not

merely a source of milk and milk products but it is considered sacred

and auspicious. Cow is considered Go Mata and people worship it by

offering water, fruits and flowers. Cow is considered as Kamdhenu---

provider of all needs of a person.

Our Rishis and Munis of yore subsisted on cow’s milk only.

Although they renounced many worldly provisions, they retained cow for

worship and as the supplier of their sustenance. Cow milk is considered

complete food and there are many instances in India where people have

survived on a glass of cow's milk only.

Kheer prepared out of cow's milk is offered as prasad to God.

There are numerous ways in which cow's milk is used as an offering to

God and in various religious practices.

India's rural population value not only cow's milk but its dung also as

purifier and all sacred functions are held in a place where it is washed

with cowdung. Cattle are considered as the main source of draughtpower

for conducting agriculture. Indian agriculture will collapse if cows do not

deliver calves, which later become bullocks and bulls for cultivation

purposes.

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 Cow is the hub of our rural life while modern means of

transportation is yet to reach many

of the 5,87,000 villages in India, it

is the bullock which

provides motive power for rural transportation and bullock cart is

considered to be the sinews of rural life. Despite modernisation it still

continues to be main source of rural transportation.

Besides, dairying also plays a dominant role as provider of

employment, particularly in rural areas. Cattle raising needs intensive

labour and at least one member of the family has to be continuously

milking and its protection. With swelling population, cultivation of land

alone cannot provide gainful opportunities of engagement and dairying

has emerged as alternative to crop production for raising their income.

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OVERVIEW

The average milk consumption is around 35 litres per person per

year in Asia, 20 litres per person per year in Africa, 92 litres per person

per year in Latin America, and 300-400 litres per person in Western

Europe. Within countries, consumption varies widely between and within

social groups. While growth of milk output has exceeded the growth

rate of the populations in industrialized economies since 1960, milk

production in the low and middle income tropics has been

increasing at around three per cent a year while, on

average, demand has been increasing at a slightly faster

rate. Demand for milk and dairy products has increased in tropical areas

where people's incomes have been growing. The increasing demand for

milk and dairy products in most low and middle-income countries has

mostly been met by imports. The milk produced in India is distinctly

seasonal. It comes from cows and buffalo in equal proportion, with a

small contribution from goats. Cows produce, on average, 446 litres of

milk annually and buffalo produce 861 litres of milk annually; buffalo milk

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ranges from six to nine per cent fat content. Eighty per cent of all local

milk is consumed in liquid form.

THE INDIAN MARKET - A PYRAMID

India's dairy market is multi-layered. It's shaped like a pyramid

with the base made up of a vast market for low-cost milk. The bulk of

the demand for milk is among the poor in urban areas whose individual

requirement is small, maybe a glassful for use as whitener for their tea

and coffee. Nevertheless, it adds up to a sizable volume - millions of

litres per day. In the major cities lies an immense growth potential for

the modern sector. Presently, the milk distribution network, dispensing

hygienically packed wholesome, quality pasteurized milk, serves barely

778 out of 3,700 cities and towns. According to one estimate, the

packed milk segment would double in the next five years, giving both

strength and volume to the modern sector. The narrow tip at the top is

a small but affluent market for western type milk products. The

effective milk market is largely confined to urban areas, inhabited by

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over 25 per cent of the country's population. An estimated 50 per cent

of the total milk produced is consumed here. The expected rise in urban

population would be a boon to Indian dairying. India, with her sizable

dairy industry growing rapidly and on the path of modernization, would

have a place in the sun of prosperity for many decades to come.

India has become the world's No. 1 milk producing country, with

output in 1999-200 forecasted at 78 million tonnes. In the year 1997,

India's milk production was on par with the U.S. at 71 million tonnes.

Furthermore, the annual rate of growth in milk production in India is

between 5-6 per cent, against the worlds at 1 per cent.

India's annual milk production has more than trebled in the last 30

years, rising from 21 million tonnes in 1968 to an anticipated 80 million

tonnes in 2001. This rapid growth and modernization is largely credited

to the contribution of dairy cooperatives, under the Operation Flood

(OF) Project, assisted by many multi-lateral agencies, including the

European Union, the World Bank, FAO and WFP (World Food Program).

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 Marketing of milk, in fact, is quite a complicated task. Milk is

produced in villages but its buyers are in distant urban areas. Milk is a

highly perishable commodity and it cannot be preserved in its natural

form for a long time.

Demand for milk is not all in

fluid form. Local demand

may be only for a portion of

fluid milk. Milk is demanded

for various milk products-

curds, ghee, butter, cheese

and sweets made of milk.

Marketing of milk has to be taken on modern scientific lines, if

the producers of milk are to be ensured a remunerative price for it.

Undertaking marketing of milk on modern lines calls for creating a lot of

marketing and processing infrastructure involving huge finance apart

from expertise. Arranging such a huge finance (for creating milk

marketing and processing infrastructure) is practically impossible for an

individual, more so for a poor milk producer.

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY

STRENGTHS:

• Demand profile: Absolutely optimistic.

• Margins: Quite reasonable, even on packed liquid milk.

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 • Flexibility of product mix: Tremendous. With balancing equipment,

you can keep on adding to your product line.

• Availability of raw material: Abundant. Presently, more than 80

per cent of milk produced is flowing into the unorganized sector,

which requires proper channelization.

• Technical manpower: Professionally trained, technical human

resource pool, built over last 30 years.

WEAKNESSES:

• Perishability: Pasteurization has overcome this weakness partially.

UHT gives milk long life

• Logistics of procurement: Woes of bad roads and inadequate

transportation facility make milk procurement problematic. But

with the overall economic improvement in India, these problems

would also get solved.

• Problematic distribution: Milk being a perishable commodity,

cannot be stored for a long period of time. Thus the

manufacturers have to provide the distributors with

refrigerators as well as good packaging so that the consumer gets

the milk in the best quantity and quality.

• Competition: With MNCs like Nestle and Britannia entering this

industry, competition is becoming tougher day by day. But then

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 competition has to be faced as a ground reality. The market is

large enough for many to carve out their niche

OPPORTUNITIES:

• Value addition: There is a phenomenal scope for innovations in

product development, packaging and presentation. Given below are

potential areas of value addition:

o Steps should be taken to introduce value-added products

like shrikhand, ice creams, paneer, pizzas, flavored milk,

and dairy sweets. This will lead to a greater presence and

flexibility in the market place along with opportunities in

the field of brand building.

o Addition of cultured products like yoghurt and cheese lend

further strength - both in terms of utilization of resources

and presence in the market place.

• Export potential: Efforts to exploit export potential are already

on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the

Middle East. Following the new WTO treaty, opportunities will

increase tremendously for the export of agri-products in general

and dairy products in particular.

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THREATS:
Milk vendors, the un-organized sector: The

unorganized producers have no bargaining capacity, no

knowledge of market conditions, are devoid of the services of

the experts and as such incapable of marketing milk in value

added forms

The SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far

outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are

fundamental and weaknesses and threats are transitory. Any investment

idea can do well only when you have three essential ingredients:

entrepreneurship (the ability to take risks), innovative approach (in

product lines and marketing) and values (of quality/ethics). The Indian

dairy industry, following it’s delicensing, has been attracting a large

number of entrepreneurs. Their success in dairying depends on factors

such as an efficient yet economical procurement network, hygienic and

cost-effective processing facilities and innovativeness in the market

place. All that needs to be done is: to innovate; convert products into

commercially exploitable ideas.

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DAIRY CO-OPERATIVES IN INDIA
One of the areas where co-operatives have made the greatest

impact is in the dairy sector in India. Today more than six million dairy

farmers belong to more than 60,000 dairy co-operatives across the

country. They have become among the largest and most successful

businesses in India, and generate more than one billion U.S. dollars

annually in earnings for their farmer-members.

This impressive network grew from a small group of farmers in

Gujarat State, who some fifty years ago rebelled against the

exploitative prices, which they were receiving for their milk from a

privately owned dairy in Bombay. Over time the village co-operatives

federated themselves into a regional union, which owned and operated a

processing plant and marketed the dairy products. With development

assistance from many international and national development agencies,

this process was replicated across the country in a project called

"Operation Flood".

The dairy farmers have benefited economically to a great extent.

Not only do they receive fair prices, but also they are paid twice a day

after their milk is delivered and tested. They also share in the proceeds

from marketing their product by way of patronage refunds from their

co-operatives.

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 The dairy co-operatives have also put a high emphasis on

educating their members and involving them in the decision-making

process of the co-operative. The milk segment is

dominated by the dairy cooperatives. Gujarat Co-operative Milk

Marketing Federation

(GCMMF) is the largest player. All other local dairy cooperatives

have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in

Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil

Nadu, etc). Other private players include J K Dairy, Heritage Foods,

Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leading

player in the sector has turned bankrupt and is facing liquidation.

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OPERATION FLOOD
Operation Flood (OF) is widely held today as a mostly successful

programme launched in our country over the past fifty years. It has got

the unique distinction of being the biggest dairy development

programme of the world in terms of coverage and longevity. It covers

roughly 10 million rural milk producing households all over India and

initially launched on July 1, 1970, it is still underway.

The basic objective of OF was to create a virtual “flood” of

rurally produced milk in India by helping rural milk producers in 18 milk

sheds in 10 selected states of India to organize Anand pattern dairy

cooperatives. The very rationale behind OF was that milk channel and a

ready remunerative market for the rurally produced milk. The milk

production, procurement, processing and marketing organization was to

be developed on the pattern of Anand model of cooperatives.

The Operation Flood is an integrated programme of the dairy

development in the cooperative sector based on three-tier structure

comprising the primary dairy cooperatives at the village level, milk

producers' union at the district level and apex federations at the state

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level. The main objective of the programme is to build a viable and self-

sustaining national dairy industry capable of meeting the domestic

demand for fresh liquid milk and milk products and competing in the

international arena. The surpluses were used in two ways to speed up

Indian dairy development. First, the donated milk products were used to

reconstitute milk, and therefore provide the major cities' liquid milk

schemes with enough

milk to obtain a commanding share of their markets. Secondly, the funds

realized from reconstitution and sale of donated products were used to

resettle city-kept milch animals and permit their progeny to multiply, to

increase organized milk production, procurement and processing, and to

stabilize the major liquid milk schemes' position in their markets.

The objectives of Operation Flood can be summarized as follows:

• To enable each city’s liquid milk scheme to restructure and

capture a commanding share of its market.

• To identify and satisfy the needs of milk consumers and

producers, so that consumers’ preferences can be fulfilled

economically and producers can obtain a larger share of the

rupees paid by consumers for their milk.

• To facilitate long term productive investment in dairying and

cattle development

• To ensure efficient supply of personnel to handle each facet of

the project.

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OF was launched in three phases: -

The Phase-I of the Operation Flood was launched in the 1970s

with assistance from the World Food Programme in the form of food aid

of 126,000 tonnes of skimmed milk powder and 42,000 tonnes of butter

oil. Funds generated through the sale of these commodities were used in

the development of 27 rural milk sheds in 10 states and for setting up

dairies in the rural hinterlands as well as the four milk-starved

metropolitan cities of Mumbai, Delhi, Chennai and Calcutta.

The Phase-II, which began in 1981, helped build a national milk grid,

linking scores of milk sheds in different states with the urban demand

centres and creating the infrastructure required to support a viable

dairy industry. The Operation Flood Phase-III is meant primarily to

consolidate the gains of the earlier phases. The main focus of this phase

is on achieving financial viability of the milk unions and the state

federations. It is being funded by a World Bank loan of US $ 360 million

besides food aid worth Rs. 2, 227 million by the EEC and Rs. 2,063

million generated from the internal resources of the NDDB. With this,

the programme is expected to cover about 170 milk sheds of the

country by organizing some 70,000 primary dairy cooperative societies.

Operation Flood is now in its third stage and involves eight million

dairy farming families. There are 200 milk processing plants in the

cooperative, government and private sectors which receive 11 million

litres of milk per day. Operation Flood dairies market three quarters of

this total. Under Operation Flood scheme, daily supplies of milk are

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collected from over 60,000 village milk procurement centers to meet

consumer demand for drinking milk. This accounts for 5.5 million tonnes

or ten percent of total milk produced. The remaining 90 per cent of milk

is utilized on farm, sold to small operators in nearby towns, or used to

produced ghee or other products. The demands of consumers in the four

major cities of India: Bombay, New Delhi, Calcutta and Madras and the

regional variations in milk supply, led to the establishment of a National

Milk Supply Grid system via train and road tankers.

POST OPERATION FLOOD: -

The programme has attracted worldwide attention because of its

spectacular success as the three phases of Operation flood succeeded

in fulfilling a major part of their objectives. Today, there are 22 states

federations in India, with 170 district level unions, more than 76

thousand village level cooperative societies and 11 million milk producer

members in the different states. These cooperatives collect an average

of 15 million litres of milk everyday. Fresh liquid milk, packed and

branded, is marketed in over 1000 cities and towns in India by these

cooperatives.

Also many developing countries, such as Philippines, Bangladesh

and Sri Lanka, intend to use OF as a model for organizing their own dairy

development programmes. Sri Lanka has indeed hired the services of Dr.

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V. Kurien, the main force behind India's white revolution to emulate the

Operation Flood in that country.

A recent evaluation of the Operation Flood programme by the

World Bank has revealed that it has not only brought about a dairy

revolution in India but has had a multi-dimensional beneficial impact on

the rural masses, especially the poor. Operation Flood had clear benefits

for the poor and women. For those landless people who own or have been

able to purchase a milch animal, it has been a boon. It has facilitated

establishment of 6,000

women's dairy cooperatives to generate higher incomes for women.

Indirectly, it has expanded the number of children attending school

because of the high-income elasticity of demand for education in Indian

villages.

The two key policy changes which had played a role in the success

of the programme were direct financial assistance to the cooperatives

to develop the dairy industry and the move to sell dairy food aid at

commercial prices within India to generate resources for developmental

work. Dumping of the items received, as free gifts in the local market

would have depressed domestic prices, discouraging the local producers

from raising production. It is now clear that with this kind of approach

followed by India even a single commodity project like the Operation

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Flood could have multiple beneficial effects on areas like nutrition,

education and job-creation, besides raising income levels.

SPREAD EFFECTS OF DAIRY COOPERATIVES

Dairy cooperatives are acclaimed as an effective instrument for

economic uplift of the rural poor, as they provide opportunities for

gainful employment and income. The opportunities provided by the dairy

cooperatives for easy sale of milk, periodic payment and incentive bonus

act as stimuli for easy sale of milk, periodic payments and incentive

bonus act as for the farmers to take up dairying on a more permanent

and regular basis; and on a larger scale albeit, within the framework of

the farm size investment and fodder resources. The unprecedented

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regular cash flow injected into the rural economy by the dairy

cooperatives has supplied a new framework to the rural economy, which

in itself was an epoch-making event. Increase adoption of dairying has

created a metamorphosis and has led to many desirable changes on the

economy of milk producers-members of co-operatives. Studies

conducted in Gujarat and elsewhere have identified three dimensions of

the spreads-effects of the dairy cooperatives –

 Economic.

 Social.

 Peripheral.

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ECONOMIC BENEFITS

Of all the benefits that accrue

due to the development of dairy cooperatives, it is the economic

incentives yielding direct and tangible returns for the milk

producers’ which provide lasting solution to their problems. The

direct economic impact of the dairy cooperatives on the producers’

households are varied and many such as: increase in the number of

milch animals owned, improvement in milk production, higher price,

better income and employment to the family members of the milk

producers and improvements in the productive traits of the animals.

 The possession of wet animals by different categories of milk

producers were higher in the village served by cooperatives than in the

villages, which did not have dairy cooperatives.

 The milk producers of dairy village obtained significantly higher

milk yield than those of their counter parts in control villages not served

by cooperatives.

 The level of adoption of improves animal husbandry practices was

considerably superior in the village served by the cooperatives.

 Dairy farming is the important occupation in rural areas. It is an

important income generating source among the landless families which

earned as much as 65% of their total income from dairy occupation.

 There was a significant improvement in the price received by the

milk producers of dairy village than that received at the control village.

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 

 The dairy farmers of the dairy village had obtained significantly

higher income than that obtained by their counter parts.

The above findings lead to the conclusion that the milk cooperatives

were instrumental in stepping up the income of the milk producers who

had adopted dairying for generation of income and gainful employment in

rural areas.

SOCIAL BENEFITS

The social dimension of the benefits of cooperative dairying is intangible

and long term in nature. It is in fact the social dimension which

renders the dairy cooperatives more relevant to rural

transformation than even the economic dimension. Some important

social benefits of dairying are outlined below:

⇒ It cuts at the very root of the age-old caste system, by providing

means for upward social mobility of the low caste milk producers

and ex-untouchables.

⇒ The dairy co-op has stimulated the desire for social participation

of milk producers across social and economic divisions. The

traditional power politics and group rivalry and ethnic conflicts

have been relegated to background.

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⇒ It is an instrument of ethnic reshuffle and a great social

equalizer.

⇒ The role of women in the traditional rural society had been

consistently undermined and underrated. The milk co-op has made

valuable contribution to enhance the status of rural women. The

happenings in a rural community called Khadgodhra are a

convincing

⇒ proof of the potentialities of dairy co-op in changing the role of

women folk.

⇒ Rural dairy co-operatives are an effective means to fight rural

poverty. Poverty is mostly confined to certain sections the rural

society who are in the lower rungs of the social ladder. It is this

section which is largely benefited by the milk co-op. regular

income from sale of milk has enlarged their perception on saving

and investment and enhanced their levels of poverty aspirations.

⇒ The rural co-op introduces concepts of organization and

democratic management of the villages. This concept of

organization and management of an economic institution is being

applied to other facets of life and other social and economic

actions

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 ⇒ The perception of health and family planning has vastly changed

as a result of the health care and veterinary services undertaken

by dairy co-op.

⇒ The dairy co-operatives have a great educative value to the rural

masses. The various educational and extension media such as

newsletters, film shows, demonstrations etc. act as a constant

source of education and information.

INDIRECT BENEFITS

 The dairy cooperatives have the capacity to generate

substantial employment opportunities in rural areas. Apart from

providing employment to the milk producing families each milk

union employs hundreds of skilled and unskilled labours and

every village society employs 3 to 10 persons depending upon the

volume of milk handed.

 The development of dairying on cooperatives lines places at the

disposal of the community a network of institutions which are

the points for collective actions, collective bargaining, agencies

for procuring and supplying technical inputs and hiring technical

personnel and in short, making available to the producers all the

economies of the large scale dairying, even to the poorest

producer. It is this cooperatives institutional infrastructure,

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 which is responsible for fulfilling the aspirations of rural

producers by innovation and change.

 Dairy development also requires the supportive infrastructure,

which are developed as a result of the dairy projects. Cattle

feed plants; factories to produce milk cans, testing equipments,

and development of transportation are the indirect and ancillary

industries, which crop up as a result of dairy development. It

also demands for services such as; banking, insurance,

electricity, appliances, repairs and maintenance, furniture and

fixtures.

 The creation of public institutions and aid to welfare activities

and public amenities is yet another dimension of the spread-

effects of

 the cooperatives dairies. The primary cooperatives and district

unions have programmes to undertake the creation of such

institutions like kindergarten, primary schools, roads, clinics,

hospitals, water supply schemes, maternity homes, wells, street

lights, public conveniences, libraries and such other welfare

measures.

 The successful working of dairy cooperatives and their

modernisation influences the technical modernisation of rural

areas in a variety of ways. Besides the ancillary industries, the

production and marketing of other agricultural and animal

husbandry products gets modernized on the lines of the milk

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 producers' cooperatives and developed strategy is adopted for

procurement, processing and marketing.

In a nutshell, dairy cooperatives are faced with a multiplicity of

problems – Economic, social, managerial, political and the like. However

there are success stories of dairy cooperatives such as AMUL.

THE AMUL STORY

In the 1940s, in the district of Kaira in the State of Gujarat,

India, a unique experiment was conducted that has become one of the

most celebrated success stories of India. At that time, in Gujarat, milk

was obtained from farmers by private milk contractors and by a private

company, Polson's Dairy in Anand, the headquarters of the district. The

company had a virtual stranglehold on the farmers, deciding the prices

both of the procured as well as the sold milk. The company arranged to

collect, chill and supply milk to the Bombay Milk Scheme, which supplied

milk to the metropolis of Bombay, and to cities in Gujarat. Polson's Dairy

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also extracted dairy products such as cheese and butter. Polson's Dairy

exploited its monopoly fully; the farmers were forced to accept very low

prices for their products, and the decisions of the company regarding

the quality and even the quantity of the milk supplied by the farmers

were final.

In 1946, inspired by Sardar Vallabhbhai Patel, a local farmer,

freedom fighter and social worker, named Tribhuvandas Patel, organised

the farmers into co-operatives, which would procure milk from the

farmers, process the milk and sell it in Bombay to customers including

the Bombay Milk Scheme. This was known as Kaira District Co-operative

Milk Producers' Union Limited.

Purely by chance, in 1949, a mechanical engineer named Verghese

Kurien, who had just completed his studies in

engineering in the USA, came to India and was

posted by the Government of India to a job at

the Dairy Research Institute

at Anand. Initially he merely provided technical assistance in

repairing, maintaining and ordering new equipment but subsequently he

became involved with the larger sociological issues involved in organising

the farmers into co-operatives and running these co-operatives

effectively.

In 1955, KDCMPUL changed its name to Anand Milk Union Limited,

which lent itself to a catchy abbreviation, Amul, which meant “priceless”

in Sanskrit. The word was also easy to pronounce, easy to remember and

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carried a wholly positive connotation. It became the flagship brand name

for the entire dairy products made by this union.

The most important feature of these co-operatives is that they

are run purely as farmers' co-operatives, with all the major decisions

being taken by the farmers themselves. The co-operatives are not 'run'

by a separate bureaucracy with vested interests of its own; the farmers

are truly in charge of their own decisions. Any farmer can become a

member by committing to supply a certain quantity of milk for a certain

number of days in a year and shall continue to

be a member only if he keeps up this

commitment. Each day, the farmers (or

actually, in most cases, their wives and

daughters) bring their milk to the village

collection centres where quantity of milk is

checked in full view of all and quality (milk fat content) is checked using

a simple device, again in full view of all. The farmers are paid in the

evening for the milk they supplied in the morning, and in the morning for

the evening's milk. This prompt settlement in cash is a great attraction

to the farmers who are usually cash starved.

Thanks to the above system, there are no disputes regarding

quantity or quality of the milk supplied by each farmer.

A variety of support services are also provided to enable the

farmers continue selling milk of adequate quality and to avoid disasters

such as the death of their cattle (for a family owning just one or two

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cattle and depending on its/their milk for their income, death of a cow

could indeed be a disaster). The farmers are progressively given new

services such as

• Veterinary care for their cattle

• Supply of good quality cattle feed

• Education on better feeding of cattle

• Facilities for artificial insemination of their cattle.

With good prices paid for their milk, raising milch cattle could become

a good supplementary source of revenue to many households. The co-

operatives were expanded to cover more and more areas of Gujarat

and in each area, a network of local village level co-operatives and

district level co-operatives were formed on a pattern similar to that at

Anand (the so called Anand Pattern).

In 1954, Amul built a plant to convert surplus milk produced in the cold

seasons into milk powder and butter. In 1958, a plant to manufacture

cheese and one to produce baby food were added—for the first time

in the world, these products were made from buffalo milk. Subsequent

years saw the addition of more plants to produce different products.

Starting from a

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daily procurement of 250 litres in 1946, Amul had become a milk giant

with a large procurement base and a product mix that had evolved by

challenging the conventional technology.

On his visit to Anand in 1965, the then Prime Minister of India, Lal

Bahadur Shastri, was impressed by what he saw—a system that

procured, processed and delivered high quality milk to distant markets

cost efficiently. Shastri could also see the difference that the income

from milk had made to the standard of living of farmers in the area.

What impressed him the most was that Amul had done all this without

government assistance, in marked contrast to a number of government

sponsored dairy programmes that were doing poorly in terms of

procuring and marketing good quality milk and boosting farmers'

incomes. Shastri asked Dr Kurien to replicate Anand's success all over

India.

A pattern similar to the Anand Pattern was to be built in other states

of India. This was carried out under a programme launched by the

Government of India, entitled 'Operation Flood'. The operation was

co-ordinated by the National Dairy Development Board (NDDB), a body

formed by the Government of India with this specific objective.

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STRUCTURE OF THE ANAND PATTERN

The basic unit in the Anand Pattern is the village milk producers'

co-operative—a voluntary association of milk producers in a village who

wish to market their milk collectively. All of the village milk producers'

co-operatives (primaries) in a district are members of their district co-

operative milk producers' union. Every milk producer can become a

member of the co-operative society. At a general meeting of members,

representatives are selected to form a managing committee, which

frames the policies of the society to govern the day-to-day affairs

relating to milk. Milk collection, the testing for milk fat content, and

sale of cattle feed etc. is handled by paid employees from the same

village. Each society also provides artificial insemination (AI) services

and veterinary first aid (VFA). Thus, these primaries also generate local

employment in the rural community. Each producer's milk is tested for

fat percentage (many also measure solids-not-fat) and is paid for, on the

basis of the quality of the milk. The primary milk producers' societies

are affiliated to a district union, which owns and operates a

feeder/balancing dairy cattle feed plant and facilities for production of

semen and its distribution. The union also operates a network of

veterinary services to provide routine and emergency services for animal

health care. The chairpersons of village societies elect the board of

directors of the union, which frames the policies for the day-to-day

management of the union's centralised facilities for milk collection,

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processing and marketing and also technical inputs. Each union is

managed professionally by a managing director, who reports to the

elected chairman

and a board of directors. The dairy, owned by a union, usually has

a milk processing plant to convert seasonal surpluses of liquid milk into

milk powder and other conserved products. With the help of the dairy

plant, the union is able to ensure that the milk producers get 80–90% of

the lean season price even in the flush season. The farmers are,

therefore, able to get a good price for the bulk of the milk that is

produced in the flush season. This has enabled the farmers to get 20–

40% higher prices than they would have if they had not been a part of

the co-operative system. Before the co-operatives, the middlemen

usually paid only 60–70% of the lean season price in the flush season.

Earlier the bulk of out-of-pocket

expenditure on milk production was for the purchase of cattle feed

ingredients, such as oilseed cakes, cottonseed etc. The cattle feed plant

owned and operated by the co-operative is able to provide nutritionally

balanced cattle feed at prices 40% lower than the prices of traditional

feeds. The village milk producers' co-operative societies (primaries)

market this cattle feed. Milk producers are able to substantially

increase their returns from milk production because of better returns

for their milk and lower feeding costs. The milk collected from the

village is usually sent to the co-operative dairy using trucks hired by the

co-operative union. Each co-operative dairy tries to market the bulk of

31
its milk as liquid milk and converts surplus milk into products with a

longer shelf life. Professional managers employed by the co-operative

ensure that they get the best returns for their produce. The profits

made by the dairy are redistributed to the milk producers as a

subsidiary payment. Many societies are able to pay substantial amounts

as bonuses to their milk

producers, based on the proportion of business contributed to the

co-operatives.

Today in Gujarat, under the Anand Pattern system, there are 11

thousand village
level co-
operatives with a
total
membership of
2.1 million milk
producers
affiliated to 12
district level
unions . These
unions federate
into a state level
apex marketing organisation known as the Gujarat Co-operative
Milk Marketing Federation (GCMMF).

Members: 13 district cooperative milk producers' Union

No. of Producer Members: 2.79 million

No. of Village Societies: 13,328

Total Milk handling capacity: 11.22 million litres per day

Milk collection (Total - 2008-09): 3.05 billion litres

Milk collection (Daily Average 2008-09): 8.4 million litres

Milk Drying Capacity: 626 Mts. per day

32
Cattlefeed manufacturing Capacity: 3500 Mts per day

The GCMMF was established in 1973 with the objective of

providing the milk producers of Gujarat with their own marketing
and distribution network. This aimed to give them access to the
most important link in the system-the customer. The farmers had
realised that marketing was the key to the success of the Anand
Pattern and to their success when they had control over the
marketing system. The

results are evident. Today, GCMMF is India's largest food

products marketing organisation with annual sales turnover
exceeding Rs 22 billion (about US$ 483.5 million).

33
Sales Turnover Rs (million) US $ (in million)
1994-95 11140 355
1995-96 13790 400
1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
2000-01 22588 500
2001-02 23365 500
2002-03 27457 575
2003-04 28941 616
2004-05 29225 672
2005-06 37736 850
2006-07 42778 1050
2007-08 52554 1325
2008-09 67113 1504

OBJECTIVES OF GCMMF

The main stakeholder of GCMMF is the farmer member for whose

welfare GCMMF exists. GCMMF states that its main objective is
the 'carrying out of activities for the economic development of
agriculturists by efficiently organising marketing of milk and dairy
produce, veterinary medicines, vaccines and other animal health

34
 products, agricultural produce in raw and/or processed form and
other allied produce'.

GCMMF aims to market the dairy and agricultural products of co-

operatives through:

• common branding
• centralised marketing
• centralised quality control
• centralised purchases and
• efficient pooling of milk.

GCMMF has declared that its business philosophy is as follows:

• To serve the interests of milk producers and

• To provide quality products that offer the best value to
consumers for money spent.

The biggest strength of GCMMF is the trust that it has created in

the minds of its consumers regarding the quality of its products.
Amul stands for guaranteed purity of whatever products it
produces. None of its products are adulterated. In India, where
such trust is hard to come by, this could provide a central anchor
for GCMMF's future business plans.

ORGANISATIONAL STRUCTURE OF GCMMF

It all started in December 1946 with a group of farmers keen to free

themselves from intermediaries, gain access to markets and thereby
ensure maximum returns for their efforts.

35
Based in the village of Anand, the Kaira District Milk Cooperative Union
(better known as Amul) expanded exponentially. It joined hands with
other milk cooperatives, and the Gujarat network now covers 2.12 million
farmers, 10,411 village level milk collection centers and fourteen district
level plants (unions) under the overall supervision of GCMMF.

There are similar federations in other states. Right from the beginning,
there was recognition that this initiative would directly benefit and
transform small farmers and contribute to the development of society.

Markets, then and even today, are primitive and poor in infrastructure.
Amul and GCMMF acknowledged that development and growth could not
be left to market forces and that proactive intervention was required.
Two key requirements were identified.

The first, that sustained growth for the long term would depend on
matching supply and demand. It would need heavy investment in the
simultaneous development of suppliers and consumers.

Second, that effective management of the network and commercial

viability would require professional managers and technocrats.

To implement their vision while retaining their focus on farmers, a

hierarchical network of cooperatives was developed, which today forms
the robust supply chain behind GCMMF's endeavors. The vast and
complex supply chain stretches from small suppliers to large fragmented
markets.

Management of this network is made more complex by the fact that

GCMMF is directly responsible only for a small part of the chain, with a
number of third party players (distributors, retailers and logistics
support providers) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's

competitive position is driven by low consumer prices supported by a low
cost system.

GCMMF is a lean organisation, a strategy that is believed to

provide it with a cost advantage. At its headquarters in Anand, four

36
general managers (GMs) and four assistant general managers (AGMs)

assist the managing director (MD). The four AGMs look after the

functions of marketing, systems, co-operative services and technical

projects, respectively. The four GMs are in charge of marketing (dairy

products), human resources development and marketing (Dhara and new

business), finance and quality assurance, respectively.

The whole country is divided into five zones, each headed by a zonal
manager responsible for the sales of all products within his zone. These
managers report to the MD but functionally each also reports to the
various AGMs/GMs at the headquarters. There are 50 sales offices
spread across the country (of which only two are in Gujarat); a sales
manager heads each office and is assisted by sales officers and field
salespersons. The entire country has been represented in this
structure. GCMMF has one overseas office in Dubai.

THE DISTRIBUTION WORK

37
Amul products are available in over 500,000 retail outlets across India
through its network of over 3,500 distributors. There are 47 depots
with dry and cold warehouses to buffer inventory of the entire range of
products.

GCMMF transacts on an advance demand draft basis from its wholesale

dealers instead of the cheque system adopted by other major FMCG
companies. This practice is consistent with GCMMF's philosophy of
maintaining cash transactions throughout the supply chain and it also
minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of

the transit time from the branch warehouse to their premises. This
just-in-time inventory strategy improves dealers' return on investment
(ROI). All GCMMF branches engage in route scheduling and have
dedicated vehicle operations.

UMBRELLA BRAND

The network follows an umbrella branding strategy. Amul is the common

brand for most product categories produced by various unions: liquid
milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-
cream and condensed milk.

DEVELOPING DEMAND

At the time Amul was formed, consumers had limited purchasing power,
and modest consumption levels of milk and other dairy products. Thus
Amul adopted a low-cost price strategy to make its products affordable
and attractive to consumers by guaranteeing them value for money.

38
INTRODUCING HIGHER VALUE PRODUCTS

Beginning with liquid milk, GCMMF enhanced the product mix through
the progressive addition of higher value products while maintaining the
desired growth in existing products.

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 milk at a basic,
affordable price.

Amul's sub-brands include variants such as Amulspray, Amulspree,

Amulya and Nutramul. The edible oil products are grouped around Dhara
and Lokdhara, mineral water is sold under the Jal Dhara brand while
fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided

inter-union conflicts but also created an opportunity for the union
members to cooperate in developing products.

MANAGING THE SUPPLY CHAIN

Even though the cooperative was formed to bring together farmers, it

was recognised that professional managers and technocrats would be
required to manage the network effectively and make it commercially
viable.

COORDINATION

39
Given the large number of organisations and entities in the supply chain
and decentralised responsibility for various activities, effective
coordination is

critical for efficiency and cost control. GCMMF and the unions play a
major role in this process and jointly achieve the desired degree of
control.board. The board is drawn from the heads of all the unions, and
the boards of the unions comprise of farmers elected through village
societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and

coordination with retailers and the dealers. The unions coordinate the
supply side activities.

These include monitoring milk collection contractors, the supply of

animal feed and other supplies, provision of veterinary services, and
educational activities.

MANANGING THIRD PARTY SERVICE PROVIDER

From the beginning, it was recognised that the unions' core activity lay
in milk processing and the production of dairy products. Accordingly,
marketing efforts (including brand development) were assumed by
GCMMF. All other activities were entrusted to third parties. These
include logistics of milk collection, distribution of dairy products, sale of
products through dealers and retail stores, provision of animal feed, and
veterinary services.

It is worth noting that a number of these third parties are not in the
organized sector, and many are not professionally managed with little
regard for quality and service.

This is a particularly critical issue in the logistics and transport of a

perishable commodity where there are already weaknesses in the basic
infrastructure.

40
ESTABLISHING BEST PRACTICES

A key source of competitive advantage has been the enterprise's ability

to continuously implement best practices across all elements of the
network: the federation, the unions, the village societies and the
distribution channel.In developing these practices, the federation and
the unions have adapted successful models from around the world. It
could be the implementation of small group activities or quality circles at
the federation. Or a TQM program at the unions. Or housekeeping and
good accounting practices at the village society level.

More important, the network has been able to regularly roll out
improvement programs across to a large number of members and the
implementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00
a.m., all employees of GCMMF meet at the closest office, be it a
department or a branch or a depot to discuss their various quality
concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and
Limit (PAL) with a process check at the end to record how the meeting
was conducted. Similar processes are in place at the village societies,
the unions and even at the wholesaler and C&F agent levels as well.

Examples of benefits from recent initiatives include reduction in

transportation time from the depots to the wholesale dealers,
improvement in ROI of wholesale dealers, implementation of Zero Stock
Out through improved availability of products at depots and also the
implementation of Just-in-Time in finance to reduce the float.

41
Kaizens at the unions have helped improve the quality of milk in terms of
acidity and sour milk. (Undertaken by multi-disciplined teams, Kaizens
are highly focussed projects, reliant on a structured approach based on
data gathering and analysis.) For example, Sabar Union's records show a
reduction from 2.0% to 0.5% in the amount of sour milk/curd received
at the union.The most impressive aspect of this large-scale roll out is
that improvement processes are turning the village societies into
individual improvement centers.

TECHNOLOGIES AND E-INITIATIVES

GCMMF's technology strategy is characterized by four distinct

components: new products, process technology, and complementary
assets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by
the GCMMF network. Village societies are encouraged through subsidies
to install chilling units. Automation in processing and packaging areas is
common, as is HACCP certification. Amul actively pursues developments
in embryo transfer and cattle breeding in order to improve cattle quality
and increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) firms
in India to employ Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internet

and be assured of timely delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to

information relating to markets, technology and best practices in the
dairy industry through net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS)

at both ends of the supply chain, i.e. milk collection as well as the
marketing process.

42
Farmers now have better access to information on the output as well as
support services while providing a better planning tool to marketing
personnel.

GCMMFs GROWTH CHART

Even at the time of its formation, GCMMF had three major

products in its portfolio: liquid milk, butter and milk powder.
Gradually, many new products were added to its range, largely milk
derivatives. In liquid milk alone, it sells full cream milk, semi-skim
milk and skim milk; these products are labelled and sold in readily
identifiable pouches. By reducing the fat content of milk, not only
can GCMMF sell the fat derivatives (such as cream and butter) but
also the resultant skimmed milks can be made available at cheaper
prices, so that poorer people can also afford to drink milk. In the
1970s, Amul introduced its processed cheddar cheese, a malt
based beverage called Nutramul and chocolates. In 1983, cheese
spread was launched by GCMMF. In the same year, it also entered
the sweet product market (milk based) through the introduction of
Amul shrikhand, a sweetish sour item produced from milk and curd
(a form of yoghurt). Amulya, a dairy whitener was introduced and it
soon became the market leader. In the 1990s, Amul introduced a
variety of new products: a condensed milk called Amul Mithaimate;
Amul Lite, a low-fat, low cholesterol spread; and Amul ice cream.

In 1996, Amul launched its Amul brand ice cream. India's ice cream
market was estimated to be worth around Rs 8 billion in the year
2000 (about US$ 175.8 million). GCMMF launched its ice creams in

43
fourteen flavours in the city of Mumbai (Bombay) and Gujarat
State. At launch, prices were about 30% lower than the prevailing
prices and GCMMF also emphasised that the ice cream did not
contain any gelatin. In less than a year, Amul ice cream commanded
a market share of about 55% in Gujarat and 30% in Mumbai; by the
year 2000, its share in India as a whole had reached 30%. In 1997,
Amul achieved further success when it managed to get various co-
operatives in the country, trying to launch their own ice cream
brands, to sell all their ice creams under the Amul brand name.
This enabled GCMMF to benefit from the capacity of many of the
more than 170 co-operative unions in the country, with a milk

procurement of more than 15 million litres/day, located close to

the markets.

By the year 2000, its product range was truly expansive: three
varieties of milk, flavoured milk, buttermilk, four varieties of milk
powder, two varieties of butter, five varieties of cheese, two
varieties of ghee (clarified butter), chocolates, chocolate drinks,
sweets, ice cream, edible oils and fruit and vegetable based
products. The latest additions to the range of brands marketed by
GCMMF are Masti Dahi (curd) and Amul Taaza (long-life milk). In
the -/year 1999–2000, GCMMF had a total turnover of Rs 22.2
billion (about US$ 550 million).

44
AMUL PRODUCTS

Breadspreads:

• Amul Butter
• Amul Lite Low Fat Breadspread

Am ul
Britannia
Verka
Others

Amul plans to protect its dominance in low-margin market with price.

Major Competitors include Britannia, Verka & Nestle. While

45
Britannia is focusing on just top 30 cities, Nestle outsources the
product to complete its dairy range.

BUTTER PRICES
Brand 100gm 500 gm
T.P. M.R.P T.P. M.R.P
Amul 11.92 13.00 57.78 63.00
Mothers 11.82 13.00 57.27 63.00
Dairy
Nestle 11.87 13.00 57.53 63.00
Britannia 11.80 13.00 57.50 63.00
Note: T.P.- Trade Price, M.R.P – Maximum retail price

Cheese Range:

• Amul Processed Cheese Spread

Am ul
Britannia
Others

• Amul Pasteurized Processed Cheddar Cheese

• Amul Mozarella Cheese
• Amul Emmental Cheese
• Amul Gouda Cheese
• Amul Malai Paneer (cottage cheese)
• Utterly Delicious Pizza

46
 50,000

40,000
Amul
30,000
Pizza Hut
20,000 Nirulas
Domino's
10,000

0
Amul Pizza Hut Nirulas Domino's

Mithaee Range (Ethnic sweets):

• Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

• Amul Amrakhand
• Amul Mithaee Gulabjamuns
• Amul Mithaee Gulabjamun Mix
• Amul Mithaee Kulfi Mix

UHT Milk Range:

• Amul Taaza 3% fat Milk

• Amul Gold 4.5% fat Milk
• Amul Slim-n-Trim 0% fat milk
• Amul Chocolate Milk
• Amul Fresh Cream
• Amul Snowcap Softy Mix

Amul
Nestle
Vijaya
Goodlife
Saras
Others

47
Amul plans to develop the white milk market. It plans to capture major
markets.

Pure Ghee:

• Amul Pure Ghee

• Sagar Pure Ghee

Dhara Edible Oils:

• Dhara Refined Vegetable Oil

• Dhara Groundnut Oil
• Dhara Mustard Oil
• Dhara Health Refined Sunflower Oil
• Dhara Fit-n-Fine Refined Soyabean Oil

Infant Milk Range:

• Amul Infant Milk Formula 1 (0-6 months)

• Amul Infant Milk Formula 2 ( 6 months above)
• Amulspray Infant Milk Food

Amulspray
Lactogen
Others

48
Amul 2 is poised to create a dent in market leader Nestle's fort. Amul
recently entered the infant food market by introducing Amul 1, a
weaning infant milk product.

The non-weaning milk food market is currently dominated by Nestle with

sub-brands like Cerelac and Nestum. Priced at about Rs 55 for a 500
gms pack, Nestle as of now enjoys a near monopoly in this segment. Amul
2 will, however, be priced at about Rs 44 for 500 gms.

The Rs 2300-crore GCMMF aims to plant Amul 2 to take on Nestle with

this distinct price advantage. Amul 2 is priced a good 20 per cent less
than the products offered by Nestle.

Milk Powders:

• Amul Full Cream Milk Powder

• Amulya Dairy Whitener
• Sagar Skimmed Milk Powder
• Sagar Tea and Coffee Whitener

Amulya
Nestle
Britannia
Others

Sweetened Condensed Milk:

• Amul Mithaimate Sweetened Condensed Milk

49
 Am ul
Nestle

Amul plans to emphasize price-leadership to drive Mithai-Mate to

market leader.

Fresh Milk:

• Amul Taaza Toned Milk 3% fat

• Amul Gold Full Cream Milk 6% fat
• Amul Shakti Standardised Milk 3% fat
• Amul Smart Double Toned Milk 1.5% fat

Curd Products:

• Amul Masti Dahi (fresh curd)

• Amul Butter Milk

Amul Ice creams

The following table gives the list of Amul ice creams currently being
sold in the market

• Royal Treat Range (Rajbhog, • Nut-o-Mania Range (Kaju

Cappuchino, Chocochips, Drakshi, Kesar Pista, Roasted
Butterscotch, Tutti Frutti) Almond, Kesar Carnival,
Badshahi Badam Kulfi, Shista

50
 Pista Kulfi)

• Utsav Range (Anjir, Roasted • Simply Delicious Range

Almond)
• Nature's Treat (Alphanso
Mango, Fresh Litchi, Anjir,
Fresh Strawberry, Black
Currant)
• Millennium Icecream (Cheese
with Almonds, Dates with
Honey)
• Cool Candies (Orange, Mango)
• Tricone Cones (Butterscotch,
Chocolate)
• Frostik - 3 layer chocolate
Bar
• SlimScoop Fat Free Frozen
Dessert (Vanilla, Banana,
Mango, Pineapple)
(Vanilla, Strawberry,
Pineapple, Rose, Chocolate)
• Sundae Range (Mango, Black
Currant, Chocolate,
Strawberry)
• Milk Bars (Chocobar, Mango
Dolly, Raspberry Dolly, Shahi
Badam Kulfi, Shahi Pista
Kulfi, Mawa Malai Kulfi, Green
Pista Kulfi)
• Cassatta
• Megabite Almond Cone
• Fundoo Range - exclusively
for kids

Amul plans to expand its reach. This will be achieved by

 Expanding market with Snowcap (the ice cream mix). The

company’s immediate objective is to create a market for ice
cream mixes.
 Launching Fundoo to combat HLL’s Max.

51
The total size of ice cream industry is around Rs 15-16 billion; around
30-32% is in the hands of organized sector valued at Rs4.9 billion, rest
all is with the unorganized sector.

The Indian Ice cream market is dominated by a large number of small

local manufacturers and regional players. There are an estimated 150
manufacturers in the organized segment, which accounts for 30-35% of
sales and about 2000 units in the unorganized market.

In the organized segment, the significant brands are Kwality Walls,

Vadilal, Amul, Mother Dairy and Baskin Robbins.

Major National Players Brands

Hindustan Lever Kwality Walls, Dairy Classic, Max,
Cornetto, Magnum
Vadilal International Vadilal, Dairy Fresh
GCMMF/Other Milk Co- Amul, Mother Dairy
operatives
Maharashtra Dairy Products Baskin Robbins

Region Brands
East Tulika, Rollicks (Induss Ice creams)
West Nature World, Pastonji, Naturals (in Mumbai only),
Dinshaw's (in Maharashtra only),
Havmor (in Gujarat only), Yum of Dairy Den (in Gujarat
only)
North Mother Dairy, Nirula's
South Arun (Hatsun Foods), Joy, Nandini(Karnataka only)

52
Hindustan Lever has a market share of around 40%, represented mainly
by Kwality Walls brand. Amul is the second largest player at the national
level, with an estimated market share of 27% and is rapidly gaining
market share. Vadilal is another player in the national market with 8-9%
of the market share but that too is shrinking.

HLL
Amul
Mother Dairy
Others

Chocolate & Confectionery:

• Amul Milk Chocolate

• Amul Fruit & Nut Chocolate
• Amul Eclairs

53
 Cadbury
Nestle
Amul
Cam pco

AMULs EXPORT

GCMMF is India's largest exporter of Dairy Products. It has been

accorded a "Trading House" status. GCMMF has received the APEDA
Award from Government of India for Excellence in Dairy Product
Exports for the last 11 years.

The major export products are:

Consumer Packs

Amul Pure Ghee

Amul Butter

Amul Shrikhand

Amul Mithaee Gulabjamun

Nutramul Brown Beverage

Amul Cheese

Amul Malai Paneer

Amul UHT Milk (Long Life)

54
Amul Gold Milk

Amul Taaza Double Toned Milk

Amul Lite Slim and Trim Milk

Amul Fresh Cream

Bulk Packs

Amul Skimmed Milk Powder

Amul Full Cream Milk Powder

Many of the productsavailable in the USA, Gulf Countries and Singapore

AMULs PARLOUR

Amul has recently entered into direct retailing through "Amul Utterly
Delicious" parlours created in major cities Ahmedabad, Bangalore,
Baroda, Delhi, Mumbai, Hyderabad and Surat. Amul has plans to create a
large chain of such outlets to be managed by franchisees throughout the
country. We have created Amul Parlours at some prominent locations in
the country, which are run by the company or its wholesale dealers

"Amul Utterly Delicious" parlours are an excellent business opportunity

for investors, shopkeepers and organizations. In order to come closer to
the customer, we have decided to create a model for retail outlets,
which would be known as "Amul Preferred Outlets"(APO).

55
AMULs STRENGHT

 Price is without doubt the source of Amul’s edge over the

competition. Amuls new offering Infant Milk Substitute is priced
lower than Nestle’s Nestum & Cerelac.
 Distribution network. Amul has over 40 product, 300 stock
keeping units, 1,00,000 retailers with refrigerators, 18,000 cold
chains & 5,00,000 non-refrigerator retailer outlets. It is during
the launch of new products the GCMMF will find this distribution
network useful. It has helped Amul score over HLL – simply

56
 because it controlled the milk and butter outlets that also stock
ice creams.
 Amuls brand mascot, the Amul Girl has helped, the co-operative
to get away spending just 1% of its revenue on advertising, while
the competition spends anything between 7-10% on advertising.
Amul spends close to 40% of its annual advertising budget on the
umbrella brand through its best-selling “Taste of India” campaign.
 Capital cost is low due to their alliance and their ability to
outsource products from other co-operatives. This will help
reduce wage cost. GCMMF has an alliance with CAMPCO, cocoa
farmer cooperative which produces 5,000 tonnes of cocoa
products every year. This alliance will help it in the confectionary
business.

BIBLIOGRAPHY

Websites: -

www.indiadairy.com

www.responservice.com

57
www.ssdairy.org

www.amul.com

Newspapers: -

The Economic Times

ACKNOWLEDGEMENT

58
We would like to thank Mrs. Adarsh
suri for giving us the opportunity to
be able to understand the working
of a co-operative house also amul
been such a big brand. It gives us a
platform to understand and evaluate
a company from a realistic and an
educational point of view.

In this way we have been

successfully exposed to the co-
operate world where we would like
to be professional.

59
 PROJECT DONE BY:

AKHIL DHADHA (06)

DEEPIKA GUPTA (12)

ESHANT JAIN (15)

SASHANK JAIN (19)

NIDHI MERCHANT (34)

VISHAL ROHIRA (46)

POOJA SHAH (52)

60