Being a milk producing unit, what prompted Amul to enter the ice-cream segment?
In the nineties, ice-cream was classified as a small scale sector. We had acquired a small dairy unit (which had the SSI (Small Scale Industry) licence. We approached Dr Verghese Kurien (then GCMMF Chairman) for his view on entering the ice-cream segment.
Dr Kurien wondered, why the production of ice-cream was reserved for the small scale sector and why India’s biggest dairy company was not making ice-cream? He then said that we should launch ice-creams. We launched Amul Ice Cream (in 1996) and changed the rules. The Indian consumers have a preference for flavours such as strawberry, chocolate and kaju draksh and these are the best-selling varieties in the ice cream segment. In India, if you want to be a mass brand, food, ice-cream or any product, and want consumers to buy your product, you have to be authentic and local. An example of this is our range of Kulfis. If you see our advertising spends, currently the maximum amount is spent on Kulfis. We have got more than 10 flavours of Kulfis – Peele wali Kulfi. Our Latest launch is Gulkand Kulfi. We have got Punjabi Kulfi, Ratnagiri Kulfi, Kashmiri Kulfi, Rajwari Kulfi, and now Gulkand Kulfi. These are all traditional Indian flavours as these are the flavours that give you volume and numbers. International flavours like Mexican chocolate doesn’t give you numbers.
You have recently diversified into the fruit juice segment. How big a market is this for Amul?
Overall, the juice segment is a big market. We have just captured a small share of the juice market and are in the learning phase. Our main emphasis and focus continues to be milk and we compete in the milk segment. We entered the fruit juice beverage space because it is milk based. If you read our bottle, it mentions fruit pulp and milk solids. The juice is packaged in a small transparent bottle, priced at Rs 10, so that people can see what they are drinking. Also, we have kept the flavours natural and fruit based.
What about the chocolate segment? You have pioneered the dark chocolate segment. Please tell us more about it.
Amul entered the chocolate segment in the late 1970s and it was very small in the initial phase. What we found was that the Indian consumer wanted to consume more dark chocolate, with lower sugar content, just like consumers in western countries. However, Indian chocolate makers were continuing to produce chocolates with high sugar content, in fact the sugar content was increasing. When we launched dark chocolates, suddenly we saw the huge consumer response to our product and then expanded our capacity by five times. Dark chocolate has done very well for us. We have become the Number One brand in the country in the dark chocolate segment. Currently, we have more than 25 varieties of dark chocolates are under our brand, including Amul Belgian milk chocolates, which is sold across India.
There are a lot of brands competing in the mid segment with more brands entering the space. How do you see the new competition?
India is not only world’s largest producer of milk and milk products but also the world’s largest and fastest growing market for dairy products. The size of the Indian market is around seven lakh crore rupees, that’s double the size of the US market. However, the organized market is one lakh seventy thousand crore rupees per annum. In the branded organized space, no other food or FMCG category is as big as milk and milk products and this category is growing at a rate of 13% -14% per annum.
In another 10 years, I believe, the size of the organized market for milk and milk products will be around seven to eight lakh crore rupees. Currently, in India, only one-third of the total milk products that is consumed is packed and branded, which means that two-third of the market is still unorganized. The consumption of milk and milk products is increasing and people are shifting from unbranded to branded products; these two factors are driving the growth in the segment. Amul is one brand, but if you look at India’s total milk production, we handle only 6%; in the organised space our share is 25%. So, there is scope and potential for others to enter. Foreign brands have stagnated in their home markets and if they have to grow, they have to move to a market that is growing. India has the most efficient supply chain for dairy products and the margin of expense is 5% -6% from factory to consumer. Globally, farmers get one-third of what a consumer pays and one-third is taken by the retailer for distribution. Companies enter India because the market is big, but when they realize that the margins are low, they go back. India is a high volume market.
There have been many iconic advertisements that we have seen from Amul. Looking ahead, what can we expect from your campaigns?
Over the years, ‘Amul Doodh Peeta Hai India’ ‘Amul Taste of India’ and ‘Utterly Butterly Delicious, Amul’ have become iconic taglines. We don’t want to change the existing statement of any of the brands. If we launch any new category or expand the existing ones, we might think of something new but the old taglines will remain in place. We don’t change our tagline like other brands do. Also, we haven’t even changed our creative agency. If our creative agency wants to change something, we warn them in advance that they can change anything but they can’t change the taglines.
I read recently that Amul has plans to target Indian residents living abroad. Will you be targeting people beyond the Indian diaspora?
No, we don’t want to invest in mainstream. If we have to target mainstream, then India is the biggest market, where we already exist.
Amul hoarding and use of the social media sets the brand apart where the tone is cheeky and topical where you use the iconic Amul girl. What goes behind these creatives?
This is done by our creative agency, daCunha Communications. Topical needs to be fast and approvals take time, our creative agency doesn’t need our approval for the topical creatives. Content needs to be up on digital media within minutes.
What are your plans for your digital consumers?
Social media is not static. It keeps changing. Yesterday it was Facebook, today its Instagram, now there is Tik Tok. You don’t know what new social media platform will emerge tomorrow. Also, you have to keep innovating to connect with today’s youth.
Chocolates, ice-creams, juices, what new product or category can we expect Amul to enter in the future?
Like I said in the beginning, we cater to the Indian taste and will remain authentic in our flavour profile. We have been focusing on Indian mithai (sweets) and will be launching Amul Kheer and Amul Rabri.
Are you planning to increase your marketing spends?
At the moment, our marketing spends is less than 1% of our annual turnover. Over the last five years our ad spend was around 0.8%. As we do not have too many brands, we follow an umbrella branding strategy. Where other FMCG brands spend 8% -15% of their revenues on marketing, we have been spending less than 1%, right from beginning and do not plan to increase it.
So you rely majorly on your business rather than marketing?
What is media? Media is a tool to communicate with the consumer. If you have an effective creative and a good media planning, you can get the same output as good marketing.