Jayen Mehta, MD, Amul India, says “Amul is a very strong distribution organisation and our penetration is deeply increasing into the rural areas. So maybe about a few years back we were not into these 10k 5k towns. We are now very, very deeply entrenched into all the towns with a population of 5,000 and 10,000, The product mb4 having value for money pricing in small packs is actually driving demand.” Mehta further says: “Going by the double digit growth that we have, revenue will definitely be Rs 80,000 crore for the year ending March. GCF turnover last year was about Rs 55,000 crore; it will cross Rs 60,000 crore. We are managing double digit growth and will continue to build on this in the coming years.” It is 50 years of Amul. Prime Minister Modi said he wants Amul to go global and wants it to be a big hub and said it is synonymous with trust, development and public participation. Everyone relates to Amul, but in terms of the company strategy, growth, becoming a power hub and global hub, how do you see that? Jayen Mehta: Yes, the golden jubilee celebration for 50 years of GCMMF was attended by Honourable Prime Minister and the vision he gave for Amul to be the best and the strongest dairy brand in the world is inspirational for all of us and the 36 lakh farmers that own Amul. Having said that, this is an organisation which is deeply rooted into the rural society, 18,600 villages, 36 lakh farmer members. It is the world’s largest farmer-owned cooperative. So obviously, the expectations are also high. Milk is of course the biggest business in FMCG, food, agriculture, all put together. And the turnover that we expect to have this year for the Amul brand will be almost 80%. We have been growing at double digit and we want to continue on that momentum. As you are aware, last year’s entire volume growth was because there was no increase in the price of milk per se. So on the whole, the trajectory of the organisation, all the constituents with 100 dairy plants, 18 district unions is all pretty much on the rise. The demand for all the products has been pretty good, encouraging in high double digits which is also very, very motivating. What number were you expecting in terms of the revenue target for this year? Jayen Mehta: Last year, Amul brand turnover was about Rs 72,000 crore. Going by the double digit growth that we have, it will definitely be Rs 80,000 crore for the year ending March, that is by the end of this month. GCF turnover last year was about Rs 55,000 crore; it will cross Rs 60,000 crore. All in all, we are managing double digit growth and will continue to build on this in the coming years. Do you expect to see a big uptick in your volumes in the upcoming summer season? What are the early signs of the kind of demand you would see at the onset of summer? Jayen Mehta: February was quite good and in March, the first two weeks have already passed and the results are pretty good. There’s a huge uptick in demand for ice creams, beverages, dahi, buttermilk — most of our products are impulse products driven by summer. Last year, the summer season was not so good. Still, ice cream managed about 25-30% growth. This year, we expect much more growth because this summer will be a normal one. The same applies to beverages, buttermilk, dahi and the rest of the product categories. You Might Also Like: High temperatures expected to heat up ice-cream sales What is your outlook on how the cheese products are doing and do you think that the performance here is expected to improve? Jayen Mehta: Yes, of course. Cheese is one of our very strong products in our portfolio. But going by the estimation of demand and the growth we are finding across categories, we are increasing the capacity by almost 55% in this fiscal. We have the largest manufacturers and brand of cheese in the country. Our market share is more than 70 in the range of 70-75%, slightly less than butter, which is about 85%. So you can assume and estimate that the number 2, 3, 4 brands are all in single digit market share and almost 1/10th or 1/20th of the volume that we do. So that way, we are very optimistic about this category. We are planning to expand more than 55% in volume capacities. The huge demand, both in the consumer, Horeca and the institutional segment, is going to go up and we will surely gain very good volumes and market share in this category as well. Okay, gaining market share in this category is what you are expecting. But there is one concern as the cacao prices have seen a very sharp increase in the last one year. So in the chocolate side, which is obviously fairly new for Amul, do you see any impact on pricing? Is there where we would see a sharp price increase coming in for the company now? Jayen Mehta: Major value, the increase in the price was in cocoa butter. And thanks to possibly huge speculation internationally that is going to happen. India fortunately also manufactures cocoa beans, cocoa butter and the cocoa powder and the derivatives. So that way we are slightly insulated because Campco is a cooperative and we have a strong association with that. Amul is the number one brand in dark chocolate which means that our exposure to cocoa is much higher. But yes, we will be taking a very calibrated increase. I will not say a sharp increase in prices because Amul after all is a value for money brand. But yes, you will see the impact of the increase in cocoa prices in other products like ice creams, beverages and so on. So the industry will be bracing for a surprisingly high increase in the price of cocoa butter. But fortunately, since we do have in house manufacturing capabilities, we are slightly better off than the rest. Calibrated increase is what you are saying as well but what would the percent be because you even mentioned ice cream also, where one could see an increase coming in? So how much would that increase be, by when would we start seeing that maybe Q1 FY25 or even in the next couple of months is where we could expect the increase? Jayen Mehta: That is for the next couple of months only. You cannot wait for a prolonged increase in these prices. I am sure that since our pricing is quite competitive, consumers will not be able to feel the pinch. And since we sell larger bars, it is much more value for money. The concern around recovery in rural areas is still there. Could you give us an on-ground situation of the demand in rural versus urban, where and what is rural really buying in terms of product? Is it the premium side or the mass side that is doing well? Jayen Mehta: The data for most of the FMCG companies that you reported for the last quarter of the previous year which is October to December was negative or 1% to 2% growth. In that period also, we grew by double digits. Having said that, Amul is a very strong distribution organisation and our penetration is deeply increasing into the rural areas. So maybe about a few years back, we were not into these 10k, Sk towns. We are now very, very deeply entrenched into all the towns with a population of 5,000 and 10,000, The product mix, having value for money pricing in small packs is actually driving demand. One third of our turnover comes from towns with a population of less than 20,000 which is a very, very sizable number and you can imagine the penetration of small pouches for milk itself, the buttermilk, the dahi, ice creams, of course, price point packs are there, milk powders, butter, cheese, for every single category we have price point packs. If you ever evaluate our portfolio of more than 1200 SKUs, there is a sizable number of SKUs in every category which is at 5, 10, 15, 20 rupees price points. So a strong distribution network, better coverage in the rural areas, more number of branches servicing each and every town within 200 kilometres of the radius and the product mix which is very, very strong. More importantly, the communication with digital also reaching rural areas, our strategy is to go in regional languages as far as the social media is concerned, the mass media, the print, the television, outdoors, and all in all as a brand, the traction for Amul and most trusted brands is pretty good in the rural areas. The difference is now with stronger communication, better telecommunication, good rural network, the bridge, I mean, the difference between the rural and urban is actually shrinking. That means better opportunities for us as brands to meet the aspirations of the young segment in the rural areas. They have a good purchasing power and that is going to give us avery, very strong demand in the future. So expecting strong demand in the future in the rural area as well. Lastly, in terms of your value added products, how was the overall growth? What is the target that you have? Jayen Mehta: Milk fortunately is a superfood. So every single component of milk has a huge value attached to it, be it the fats that we consume in the form of butter or ghee or the solids not fat, which is stronger component is protein, lactose, and so on. And milk by itself as a complete food and is a very, very strong product. So we have more than 100 dairy plants now. Honourable Prime Minister inaugurated the latest plant at Varanasi which is a state-of-the-art five lakh litre dairy plant expandable to 10 lakh. So with 100 dairy plants with a huge product portfolio and going down to the rural areas this is a very, very strong thing. And milk per se, when you sell in package form is the best form of value addition. With zero inventory and a very quick turnover, it is the best form of value because that is where commodity prices go up and down but the consumer prices go steady. But having said that, apart from milk, which is half of our turnover, the products like milk powders, butter, ghee, cheese, ice cream, beverages — each one of them add value to milk that we buy from our farmers. And today, if you spend Rs 100 on Amul products, 85% goes back to the farmer. So it is a very, very tightly calibrated game, very cost efficient, very cost effective, value for money for the consumers and the best price for the producers. And that is how ‘we are able to pay the best price to our farmers, better than any European farmer or an American farmer or a New Zealand farmer. The consumers get the best products at the most value for money pricing. So the outlook is pretty good and the value addition that we do in milk, both as a whole or breaking down the components, be it the protein or the probiotics or different categories that we get into value addition with expansion in manufacturing using state-of-the-art technology, which means milk, which is the largest agricultural crop of India, will continue to give livelihood to more than 10 crore farmer families across the country and obviously nourishment to more than a billion consumers like us. ‘We all must confess unanimously that there is nothing better than the Amul butter in the entire world, right. You travel anywhere, just nothing compares to that salted butter. Jayen Mehta: Thank you so much. We are exporting already to almost 50 countries and we plan to increase our base in different parts of the world. The vision that we have been given by Honourable Prime Minister to be the the biggest dairy in the world, let us hope we are able to make it possible in the shortest possible time. You just have to, because nothing compares to that product of yours. Jayen Mehta: Thank you so much. We will end with a traditional quote aapke muh mein ghee shakar (Let there be ghee and sugar in your mouth).
Amul Aims to Become the World’s Largest Dairy, Eyeing Global Expansion
