Amul: A Dairy Cooperative Success Story in India

Introduction

Amul (AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. ), formed in 1946, is a dairy cooperative in India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2 million milk producers in Gujarat, India. AMUL is based in Anand, Gujarat and has been an example of a cooperative organization's success in the long term. It is one of the best examples of cooperative achievement in a developing economy. "Anyone who has seen, the dairy cooperatives in the state of Gujarat, especially the highly successful one known as AMUL, will naturally wonder what combination of influences and incentives is needed to multiply such a model a thousand times over in developing regions everywhere. " The Amul Pattern has established itself as a uniquely appropriate model for rural development.

Amul spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand. Amul is the largest food brand in India and the world's Largest Pouched Milk Brand with an annual turnover of US $1050 million. Currently, Unions making up GCMMF have 2. 8 million producer members with a milk collection average of 10. 16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries.

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Its bid to enter the Japanese market in 1994 did not succeed, but now it has fresh plans to enter the Japanese market. Other potential markets being considered include Sri Lanka. Dr Varghese Kurien, former chairman of the GCMMF, is recognised as a key person behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.

History

The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest food products marketing organisation in India. It is the apex organization of the Dairy Cooperatives of Gujarat.

This State has been a pioneer in organizing dairy cooperatives and our success has not only been emulated in India but serves as a model for the rest of the World. Over the last five and a half decades, Dairy Cooperatives in Gujarat have created an economic network that links more than 2.8 million village milk producers with millions of consumers in India and abroad through a cooperative system that includes 13,141 Village Dairy Cooperative Societies (VDCS) at the village level, affiliated to 13 District Cooperative Milk Producers’ Unions at the District level and GCMMF at the State level.

These cooperatives collect an average of 7.5 million litres of milk per day from their producer members, more than 70% of whom are small, marginal farmers and landless labourers and include a sizeable population of tribal folk and people belonging to the scheduled castes. The turnover of GCMMF (AMUL) during 2008-09 was Rs. 67.11 billion. It markets the products, produced by the district milk unions in 30 dairy plants, under the renowned AMUL brand name. The combined processing capacity of these plants is 11.6 million litres per day, with four dairy plants having a processing capacity in excess of 1 million Litre per day.

The farmers of Gujarat own the largest state-of-the-art dairy plant in Asia – Mother Dairy, Gandhinagar, and Gujarat - which can handle 2.5 million litres of milk per day and process 100 MTs of milk powder daily. During the last year, 3. 1 billion litres of milk were collected by Member Unions of GCMMF. Huge capacities for milk drying, product manufacture and cattle feed manufacture have been installed. All its products are manufactured under the most hygienic conditions. All dairy plants of the unions are ISO 9001-2000, ISO 22000 and HACCP certified.

GCMMF (AMUL)’s Total Quality Management ensures the quality of products right from the starting point (milk producer) through the value chain until it reaches the consumer. Ever since the movement was launched fifty-five years ago, Gujarat’s Dairy Cooperatives have brought about significant social and economic change to our rural people. The Dairy Cooperatives have helped in ending the exploitation of farmers and demonstrated that when our rural producers benefit, the community and nation benefit as well. The Gujarat Cooperative Milk Marketing Federation Ltd. cannot be viewed simply as a business enterprise.

It is an institution created by the milk producers themselves to primarily safeguard their interests economically, socially as well as democratically. Business houses create profit in order to distribute it to the shareholders. In the case of GCMMF, the surplus is ploughed back to farmers through the District Unions as well as the village societies. This circulation of capital with value addition within the structure not only benefits the final beneficiary – the farmer – but eventually contributes to the development of the village community. This is the most significant contribution the Amul Model cooperatives have made in building the Nation. The three-tier Amul model The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated with a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The above three-tier structure was set up in order to delegate the various functions; milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation.

This helps in eliminating not only internal competition but also ensuring that economies of scale are achieved. As the above structure was first evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood Programme, it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives. Responsible for Marketing of Milk & Milk Products Responsible for Procurement & Processing of Milk Responsible for Collection of Milk Responsible for Milk Production.

Village Dairy Cooperative Society (VDCS)

The milk producers of a village, having surplus milk after their own consumption, come together and form a Village Dairy Cooperative Society (VDCS). The Village Dairy Cooperative is the primary society under the three-tier structure. It has a membership of milk producers of the village and is governed by an elected Management Committee consisting of 9 to 12 elected representatives of the milk producers based on the principle of one member, one vote. The village society further appoints a Secretary (a paid employee and member secretary of the Management Committee) for management of the day-to-day functions.

It also employs various people for assisting the Secretary in accomplishing his / her daily duties. The main functions of the VDCS are as follows: Collection of surplus milk from the milk producers of the village & payment based on quality & quantity. Providing support services to the members like Veterinary First Aid, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, conducting training on Animal Husbandry & Dairying, etc. Selling liquid milk for local consumers of the village. Supplying milk to the District Milk Union

Thus, the VDCS is an independent entity managed locally by the milk producers and assisted by the District Milk Union. District Cooperative Milk Producers’ Union (Milk Union) The Village Societies of a District (ranging from 75 to 1653 per Milk Union in Gujarat) have surplus milk after local sales come together and form a District Milk Union. The Milk Union is the second tier under the three-tier structure. It has a membership of Village Dairy Societies of the District and is governed by a Board of Directors consisting of 9 to 18 elected representatives of the Village Societies.

The Milk Union further appoints a professional Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his / her daily duties. The main functions of the Milk Union are as follows:

• Procurement of milk from the Village Dairy Societies of the District.
• Arranging transportation of raw milk from the VDCS to the Milk Union.
• Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc.
• Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members.
• Providing management support to the VDCS along with regular supervision of its activities.
• Establish Chilling Centres & Dairy Plants for processing the milk received from the villages.
• Selling liquid milk & milk products within the District. ? Process milk into various milk & milk products as per the requirement of State Marketing Federation.
• Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.

State Cooperative Milk Federation (Federation)

The Milk Unions of a State are federated into a State Cooperative Milk Federation. The Federation is the apex tier under the three-tier structure. It has a membership in all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. The State Federation further appoints a Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions.

It also employs various people for assisting the Managing Director in accomplishing his daily duties. The main functions of the Federation are as follows:

1. Marketing of milk & milk products processed/manufactured by Milk Unions.
2. Establish a distribution network for marketing milk & milk products.
3. Arranging transportation of milk & milk products from the Milk Unions to the market.
4. Creating & maintaining a brand for marketing milk & milk products (brand building).
5. Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services.
6. Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions.
7. Establish feeder-balancing

Dairy Plants for processing the surplus milk of the Milk Unions. Mon purchase of raw materials used in manufacture/packaging of milk products. The dairy industry in India and particularly in the State of Gujarat looks very different. India for one has emerged as the largest milk-producing country in the World. Gujarat has emerged as the most successful State in terms of milk and milk product production through its cooperative dairy movement.

The Kaira District Cooperative Milk Producers’ Union Limited, Anand has become the focal point of dairy development in the entire region and AMUL has emerged as one of the most recognized brands in India, ahead of many international brands. Today, we have around 176 cooperative dairy Unions formed by 1,25,000 dairy cooperative societies having a total membership of around 13 million farmers on the same pattern, who are processing and marketing milk and milk products profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra Pradesh or a Nandini in Karnataka.

This entire process has created more than 190 dairy processing plants spread all over India with large investments by these farmers’ institutions. These cooperatives today collect approximately 23 million kgs. of milk per day and pay an aggregate amount of more than Rs. 125 billion to the milk producers in a year.

Objectives of study

1. To ascertain the effectiveness of advertisements towards the sales of Amul chocolate.
2. To know the range of products, offered by the company.
3. To know the relationship of sales with the advertisement.
4. To know the awareness of people towards Amul chocolates.
5. To know which advertisement tool is mostly preferred by people.
6. To know the preference of Amul chocolates in comparison to other competitive brands.
7. To know the factors which affect consumers’ buying behaviour to purchase chocolates.
8. To know the market position of AMUL as a brand.

Plants

• The first plant is at ANAND, which is engaged in the manufacturing of milk, butter, ghee, milk powder, flavoured milk and buttermilk.
• The second plant is at MOGAR, which is engaged in manufacturing chocolate, Nutramul, Amul Ganthia and Amul lite.
• The third plant is at Kanjari, which produces cattle feed.
• The fourth plant is at Khatraj, which is engaged in producing cheese.

Today, twelve dairies are producing different products under the brand name Amul. Today Amul dairy is the no dairy in Asia and no in the world, which is a matter of pride for Gujarat and the whole of India.

Research Methodology

There are two sources used for methodology:

• Primary sources
• Secondary sources

1. Primary sources: A primary source is the most direct place you can find the information you want to write about. For example, Census. gov would be an article detailing the number that would not be considered primary. Some other examples of primary sources are peer-reviewed research publications, journals, diaries, legal documents, government records, original maps, photographs, original manuscripts, institutional records, or national archives.
2. Secondary sources: secondary source of information is one that was created later by someone. Examples of secondary sources include literary criticism, biographies, encyclopaedia articles, and journal articles critiquing the work of others.

There are two types:

1. Internal sources: publish broachers, official reports etc.
2. External sources: periodicals, journals, newspapers, internet.

Research problem

• Increase the awareness level of AMUL CHOCOLATE.
• Seek the general perception of consumers towards AMUL CHOCOLATE.
• To find the performance of AMUL CHOCOLATE vis-a-vis other brands.
• To know the consumer psyche and their behaviour towards AMUL CHOCOLATE.

First, I had to know about all the competitors present in the chocolate segment (Reputed and well-established brands as well as Local brands).

Before going for the survey I had to know the comparative prices of all the competitors existing in the market. Since chocolate is a product that attracts children and youngsters hence I had to trace the market and segment it, which mainly deals with people of various age groups.

As chocolate is a different product, the main information needed is the various types of chocolates available in the market, their calorific value and various other facts.

As Amul chocolate advertisements are mainly done through hoardings but on television, the advertisement is being telecasted timely and at the proper time or not.

AMUL Chocolate is made from Sugar, Cocoa Butter, Milk Solids, and Chocolate mass.

Composition

• Milk Fat 2%
• Sugar 55%
• Total Fat 32. 33% (Milk Fat + Cocoa Fat)
• Cocoa Solids 7. 5%
• Milk Solids 20%

The research instrument used - details

If one wants to know what type of dentifrice people use, what they think of, television commercials, or why they buy particular brands of cars, the natural procedure is to ask them. Thus, the questionnaire method has come to be the more widely used of the two data collection method. A questionnaire consists of list of questions to be asked from the respondents and the space provided to record the answer / responses.

Questionnaire can be used for the personal interviews, focus groups, mails and telephonic interviews. The choice among these alternatives is largely determined by the type of information to be obtained and by the type of respondents from whom it is to be obtained. The common factor in all varieties of the questionnaire method is this reliance on verbal responses to question, written or oral.

Conclusion

As we know that Amul is a very big organization and market leader in dairy products. It has maximum market share in Milk, Butter and Cheese, which are its main/core products. As we know Amul is a co-operative organisation but chocolate industry is a profitable industry which can’t be ignored. With the help of research, company can find out its week points in chocolate product and can increase its market share through rectify mistakes.

People have believed in Amul’s product and they will accept its chocolates also if effective actions are taken. The survey resulted into following conclusions:

• Amul must come up with new promotional activities such that people become aware about Amul Chocolates like Chocozoo, Bindaaz, and Fundoo.
• Quality is the dominating aspect which influences consumer to purchase Amul product, but prompt availability of other chocolate brands and aggressive promotional activities by others influences the consumer towards them and also leads to increase sales. In comparison to Amul Chocolate, the other players such as Cadbury, Nestle, and Perfetti provide a better availability and give competition to the hilt.
• People are mostly satisfied with the overall quality of Amul Chocolate, but for the existence in the local market Amul must use aggressive selling techniques.

Scope of improvement

In order to maintain and increase the sales in the city of Delhi, the following recommendations regarding Amul Chocolates; particularly regarding advertisement, distribution, promotional policies, etc, are hereby suggested:

• First and foremost Amul should take proper action in order to improve its service, because although being on a top slot in butter and milk supplies it does not get the sales in chocolate, which it should get.
• Company should use brand ambassador which attracts each age segment i. e. Sania Mirza, Shaktimaan, Amitabh Bacchan, Superman, Krrish, Jadoo etc.
• Try and change the perception of the people through word of mouth about Amul in advertisements, because they are the best source to reach Children and families.
• Though Amul chocolate advertisements are rarely shown on television yet many people could recall it as per the data of research.
• It shows that there is only need to give advertisement only to rememorize customers. Because Amul is a very strong brand name.
• Company should launch chocolate in new attractive packing to change image of Amul chocolate in consumers mind.
• Company should introduce sales promotion schemes like free weight, pranky, tattoo, contest, free gifts etc.
• Advertisement can be done with the help of animations that attracts children and teenagers because chocolates are consumed largely in this segment.
• Company should launch chocolates in new flavours like – Mix Fruit Pineapple Elaichi Coffee Strawberry Banana

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