From sponsoring F1 teams to orienting products towards youth, Amul’s Sodhi is giving his company a makeover. Yet, it also needs to focus on pricing.
Rupinder Singh Sodhi looks like a man in a hurry. After taking charge as the managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), or Amul, on January 4, 2011, Sodhi has been busy trying to reinvent Amul’s brand as well as expand it into new categories.
For instance, the year 2011 saw Asia’s largest milk brand sponsor both the Netherlands’ cricket team in the ICC Cricket World Cup as well as Switzerland-headquartered Sauber’s F1 team at the inaugural Indian Grand Prix. Then, there are new products, such as fresh fruit yogurt called Flaavyo, pro-biotic lassi, close to 30 new varieties in the ice-cream segment, a re-packaging and re-branding of its ghee (butter oil) products Sagar and Amul, as well as energy drink Stamina and the company’s latest venture into the quick service restaurant (QSR) business couple of months ago. Come Summer 2012, Amul is also set to revamp its cheese and condensed milk brand and will also launch a frozen yogurt brand soon.
It is not as if Amul hasn’t forayed into new territory before but the buzz around the company and its recent marketing efforts are in sharp contrast to the kind of attention Amul was getting a little more than a year ago, thanks to the controversial exit of its former managing director BM Vyas and a no-trust vote moved against its chairman Parthi Bhatol. (Though Vyas bid adieu to GCMMF, Bhatol survived the no-confidence motion.)
At a time when Amul was dogged by controversies, Sodhi, the then-chief general manager at GCMMF, was appointed as stand-in MD in June 2010 and later on officially took charge as MD in January 2011. Sodhi, who has logged 29 years in marketing and sales functionalities, has a very clear idea of where he wants to take Amul. “Despite its reach and strong network, Amul was perceived as a local brand. The intention behind sponsoring sporting events was to re-position Amul as a global brand while retaining its focus on India,” says RS Sodhi, a member of the first batch (1982) to graduate from the Institute of Rural Management Anand (IRMA). Sodhi has been with Amul since 1982.
There’s more to Sodhi’s gameplan. For a company traditionally perceived as hosting a brand for housewives, Amul is now aggressively focusing on GenNext, sponsorship of world events being one of the conscious efforts in this direction. “These sports events that we sponsored were basically done to target youngsters and teenagers. The whole idea is to promote Amul as a young brand,” he adds. (Even while re-packaging its ghee brand, Amul positioned it as a health product aimed at youth and made it more contemporary. Re-branding of its energy drink Stamina was yet another step in that direction.)
TVS Sreekanth, research associate, FMCG & Media at Angel Broking believes that Amul has grown by leaps and bounds just in the past year. “Amul launched a flurry of new flavours in ice-cream and increased its focus on Amul Parlours. This has added value to its retail and distribution chain by huge proportions. The smart thing that Amul has done as an industry leader is that it has made its presence felt in new and fresh product categories like Tetrapak milk and gourmet flavours of ice-cream,” says Sreekanth.
There is a distinct change in the way that Amul presents itself today. “Amul has been conservative in its approach but it seems it has now turned aggressive, thanks to Sodhi. Various developments have taken place on marketing, advertising and new product range fronts,” says the MD of Sumul Dairy, Jayesh Desai. (Sumul Dairy is run by Surat District Co-operative Milk Producers Union, which is one of the 15-member unions of GCMMF.) “Design and packaging has also changed noticeably,” adds Desai.
From being involved in low-cost marketing for years, Sodhi has propelled Amul in a new trajectory, and has suddenly increased its high-cost activities. This amounts to real growth, says Harish Bijoor, a branding and marketing expert. “What used to be a very advertising-oriented approach is now witnessing an increased focus towards brand promotion through other channels like events. This has turned out very good for the brand in last one year,” says Bijoor.
Yet, despite all of this, GCMMF’s marketing and philosophy remains wedded to the path that the father of India’s ‘White Revolution’, Dr Verghese Kurien, paved, which according to Sodhi, focused on protecting the interest of its dairy farmers, numbering 3.1 million today. In the past two years, the farmers have received up to 40 per cent higher prices for the milk they supply to GCMMF dairies—Rs 460 to Rs 470 per kg fat in 2011-12 as compared to Rs 337 per kg fat. “This is our biggest achievement,” adds Sodhi.
Similarly, milk procurement by GCMMF has increased to 14 million litres per day in January, 2012 as compared to 11.9 million litres per day in the corresponding month last year. On the other hand, the turnover of the co-operative federation is likely to increase from Rs 8,000 crore in 2009-10 to Rs 12,000 crore in 2011-12.
Still, is there a catch in this farmer-centric worldview? Take, for example, the poultry business whose price decisions are consumer-centric versus Amul’s farmer-centric decisions. “Amul may be rightfully incentivising farmers by raising prices keeping farmers’ interests in mind. But both poultry and milk have almost same income elasticity, whereas the poultry businesses do not raise prices as much as Amul does for its milk,” says renowned economist YK Alagh who is also chairman of Institute of Rural Management, Anand (IRMA) and former member of the Planning Commission. “Hence, while poultry businesses have seen a growth of eight per cent, the dairy business, especially of Amul’s, which happens to be the industry leader, grows only by five per cent. Amul could increase its efficiency if it looks at pricing from consumers’ perspective,” adds Alagh.
Another thing for the company to watch out for is the very thing that has allowed it to grow at such a clip, namely its ferocious expansion into product categories. “This has resulted in a great degree of brand dissipation. Amul must now look to strongly consolidate its brand,” says Bijoor.
Now, though, the company will take a breather from its relentless pace in introducing new products to market and instead, is focusing on expanding its reach, says Sodhi. GCMMF is eyeing presence in 3,000 small towns in India, where it had no presence earlier. It will appoint 200 super dealers, each covering 15 small cities. Also, the number of Amul parlours is expected to rise to 7,000 this year from 6,000 as of June 2011. Explaining the rationale behind retail expansion, Sodhi said, “FDI retail is not in favour of farmers. We should be ready with our retail network, if FDI is allowed in retail.”
Dr. Kurien is no doubt nodding in emphatic approval.