The commodity segment has driven the maximum business growth for Amul and given the company surpluses with double-digit volume growth coming from across categories, says Jayen Mehta.
The MD of Amul spoke to e4m Editor Naziya Alvi Rahman about the brand’s big launches this year, expansion to newer countries and his turnover plans for the next five years. Edited excerpts below:
We were looking at your financial results and you have done exceedingly well with a growth of 18.4%. What are the factors that continue to work for you despite the global slowdown?
Our business is built on five strong verticals. One is the fresh product portfolio, which comprises milk, buttermilk, and fresh paneer, and that is doing exceedingly well. It has grown by more than 20 per cent. The second one is that of our dairy products - butter, cheese, milk powders, and tetra-pak milk. So that segment has also seen a good resurgence in the entire market. We have seen double-digit volume growth coming from across the categories. The third segment is the frozen product division like fries, snacks, diced cheese and ice-cream, which has grown very well. More than 40 per cent growth has come from this segment.
The commodity segment has significantly driven the maximum business growth and given us the surpluses. We try to sell it through our Amul Dairy trade portal. Also, there is an auction portal in which we get buyers from across the country. More than 2,500 customers participate in our auctions. If we deep dive into the data then we do about eight to ten auctions every day. Focusing on last year's data, we did over 2,500 auctions. As a result, we got good market sales along with good price realization.
Moving on to the fifth segment - international business. We export our products to more than 40 to 50 countries. We have added more countries and the business is very promising and growing very well. All these five business verticals or the pillars of our business are doing very well. One major trend for our industry is consumers shifting from unbranded and loose to package and branded. The sudden upsurge in the demand for packaged products allowed us to expand the business further. Also, we are estimating a growth of 20% and the turnover to increase from Rs 55,000 crore to Rs 68,000 crore. Approximately, Amul’s turnover will increase to Rs 85,000 crore from Rs 72,000 crore.
Which are your biggest markets abroad? And is it only popular amongst Indians, and NRIs, or is it also consumed by the locals?
The main reason for the brand to go global is the NRI segment because they are familiar with Amul, and that gives us an easy foothold in the market. We are exporting to the US, Canada, the Middle East, the entire south-east Asia market, and also the Far East, including Japan, Australia, New Zealand and so on. Also, the NRI market is a very promising market for us. Having said that, we have also entered into products like French fries, which have a huge demand. We have created new markets across the Philippines, Japan, the Middle East and Malaysia.
What new markets are you likely to enter this year?
We have entered into about 12 countries in Africa in the last couple of years. We will be adding another five or six there. So, it's a round way of expanding, growing the market and adding more products in each of them.
You are a legacy brand on television, your ads are in demand and people look up to them. But now you're also there on digital. So, what is the percentage of business coming from online versus offline outlets and what are your digital spends like?
Amul is big on digital for the primary reason that we are in the business of creating content. So that is where we get a huge boost in our visibility and actually with limited spends. I'll put it from a different perspective. The TV programmes and shows, and the TV advertising business are known to you. We sponsored Master Chef this year and we did many other activities on television. But in digital, for the last three and a half years now, post Covid, we are running a popular show on our Facebook page called Simple Homemade Recipes. We have done more than 5,100 shows non-stop in the last 1100 days connecting more than 3500 to 4000 chefs. They come and present their content on our Amul Facebook page, which is viewed by a large number of people in India and around the world. We are also making Insta reels and promoting them on YouTube. So, this is one small way of content creation.
Furthermore, we are now present on social media in 13 languages, 12 of these are Indian languages and the 13th one is Arabic. We speak to our customers in their mother tongue. This is the best way to connect to the audience in their mother tongue and we do about 300 to 500 posts every month and across multiple languages.
Moreover, we are now the official partners of nine out of ten IPL teams this year. We were business partners with five IPL teams last year. We are the sponsors of the Indian contingent to Olympics, the Commonwealth Games last year, and we'll be doing it for the Asian Games this year. Also, we are official sponsors of all five Women Premier League teams for the next three years. We were also beverage partners to the kabaddi and volleyball leagues. We were also associated with Argentina and Portugal football teams during FIFA. It's not just the advertising spends, it's the content and the power of communication, using the right medium for the right target audience.
Amul is considered a very bold brand. You have taken a stand on all topical issues. How much has it helped you as brand?
That is the fundamental part of our content creation. We have very influential campaigns and they have been doing well because of the power of consistency of communication. The ‘Butter Girl’ is free to talk about every issue in India and around the world. She has been there for 55 years. This is the best thing going for us.
What is the overall marketing strategy? What is the media mix like?
Media has to go where the consumers are. We are among the top advertisers on television, print, radio and outdoor. We ensure that we need to be where our consumers are. So, all said and done, the brand spends less than 1 per cent of its turnover on advertising. Talking of the medium, I feel the lines converge because when you are doing a Master Chef, you run a cheese recipe contest, and then you give space to 1,000 participants on the Facebook page, showcase their recipes and the best are selected by the Master Chef judges. Also, some get a chance to come on the show. It is a well-integrated strategy in which you can interplay the strength. And at the end of the day, it's where the consumer is.
Would you like to speak on entering a new market and it becoming a controversial issue? You've been entering so many new markets. Have you seen this kind of a response ever before?
See, the entry into Karnataka is not new. As you may be aware, we have been selling Amul milk in North Karnataka since 2015, so Karnataka’s entry is not new. Amul and Nandini are both cooperatives. Both organisations work on the same values, philosophies, and business models. They have come out of this Amul model itself. And we have been collaborating and working together for decades together. Having said that, the entry into Bengaluru was a calibrated attempt to enter the market only to service the niche segment through the eCommerce channel. In Bengaluru, Nandini has a huge price advantage. They're selling the products at about Rs 39-Rs 40 per litre for tone milk, as compared to Rs 54 - the price which you pay in Mumbai and Delhi, we can't use our price there. We did not undercut it and our effort is to only sell through commerce channels.
You are doing so well in all the domains in all aspects. But what will be your five-year plan? Where do you want to take Amul from here?
We have identified several pillars of growth. If you have $9 billion dollar today, how do we add another billion dollars in different categories? We identified a billion-dollar category, say in organics. We have launched eight different products, including atta, basmati rice, and different type of pulses. We shall be soon launching organic tea, organic sugar, jaggery, a lot of spices, and so on. Everything you perhaps consume in your kitchen will be organic.
Apart from the Amul range of dairy products, we have also launched oil. Our strategy is to launch oil at Rs 100. This is going to be a first in India. The price remains fixed and the volume changes depending on the changing dynamics in the oil market. Our strategy in the oil space is beating inflation and being assured of a standard price. We are also looking at the protein vertical in which we are going to launch a range of protein-based products. Protein buttermilk is already in the market. We shall soon be launching protein yogurt, protein shakes, protein water, high-protein milk, high-protein cookies, and high-protein ice creams.
Another pillar is probiotics. Starting now, we have converted the entire buttermilk range, which we sell in pouches across India (almost 3 million litres a day), into probiotics at the same price of Rs 30 a litre. There will be no change in taste and probiotic quality stuff will be available to customers around the country at the same price. This is going to be a big revolution, which will help strengthen the immunity of our country.
Mithai is another category we are working on as there is a huge appetite for Indian sweets. We already have a portfolio of about 50 for kajukatli, pedas, rasmalai, rasgulla and shrikhand, and so on. So, we are building on that portfolio too, and making fresh mithai available at a very affordable price with the best quality to the customers. We have more than 10,000 outlets across the country and mithai will be sold through the Amul parlours. We shall also be selling online. So, if you are in Mumbai today and order a pack of kajukatli, it will be delivered on the same day to you. So that is also an experiment. We have also launched a direct-to-consumer portal.and are present in all format stores and e-commerce channels. We are looking at a turnover of Rs 1 lakh crore by 2025. We also even have enough plans for 2030.