As consumers pivot from loose to packaged milk products, Amul eyes new market worth Rs 20k crore

Dairy major Amul has been in the news primarily because of the dozens of new launches over the last several months. Most notable among them is probably the brand’s ‘immunity and hygiene’ range, which includes packaged Panchamrit, haldi ice cream, tulsi doodh, camel milk powder, and even immunity boosting chocolate.

While Amul has been actively riding the immunity wave, the brand is also looking at a longer term shift – from consumption of loosely sold dairy products to packaged dairy brands. But what sets Amul apart here is the scale of opportunity, which Jayen Mehta, senior general manager, planning and marketing, GCMMF (Amul’s owner cooperative), terms as ‘low-hanging fruit’.

Mehta says that the trend of eating immunity boosting, safe and healthy food is not just about eating products with ‘immunity’ branding. “It’s a tectonic shift in the attitude of the consumers towards pure, natural and healthy food available at an affordable price. It’s a once in a lifetime opportunity for a brand like ours.”

Amul is banking on the trend of consumers shifting from unorganised/loosely sold dairy products towards organised brands, which offer a promise of hygiene and good quality. This affects dairy-based product segments like milk, ghee, paneer, mithai, curd and buttermilk.

India produces around 50-55 crore litres of milk daily. Close to a third of the total production is retained by the farmer-producers themselves. Of the rest which flows into the market, 10 crore litres goes to organised players.

India’s organised/branded dairy market is valued at Rs 2 lakh crore ($270 billion). Amul alone commands around 25 per cent (or Rs 50,000 crore/$67.5 billion) of the organised/branded market.

Mehta says that the unorganised business together accounts for Rs 4 lakh crore to Rs 5 lakh crore ($540 billion to $675 billion). That way, even with a 10 per cent conversion (from unorganised to branded), the opportunity for organised players could be worth well over Rs 40,000 crore ($54 billion).

Mehta suggests that half of the newfound market worth Rs 20,000 crore ($27 billion) presents an opportunity for Amul, driven by its reputation, consumer trust and strong national presence.

He mentions that the conversion trend is more pronounced in India and slices it in four distinct shifts:

a. From loose to packaged

b. Commodity to brand

c. Unbranded to branded

d. Local/regional brands to trustworthy and reputed national brands

However, milk and milk-based products figure in the list of mass consumption items, and have been traditionally consumed across geographies and socio-economic strata. The unorganised/local players play a stronger role in smaller towns and rural India.

Mehta says that the demand for packaged dairy is appearing from all markets – urban and rural. “It depends on the nature of products these markets consume. However, we are seeing huge growth in all SKUs (stock-keeping units) of milk powders and packaged milk in most markets. Sweets, and even chocolates, are witnessing growth in multiple times of the previous year's base.”

Amul is trying to get its act together quickly to make the most of the surge in demand over the last several months of the COVID pandemic. Apart from investing actively in advertising to drive brand awareness, the brand has also been opening new plants and ramping up distribution. “The faster we migrate, we will get assured growth in the long-term,” Mehta says.

The brand has opened five new product processing plants over the last several months. One each in Srinagar (in Jammu and Kashmir), Balia (in Uttar Pradesh) and Rudrapur (in Uttarakhand), and two new plants in Punjab (in Khamanu and Bhatinda).

The Anand, Gujarat based dairy brand has also been opening sales branches in new markets like Leh, Solapur, Mehsana, Bhopal and Mysore. It has opened over 1,500 Amul parlours (brand outlet) in the last few months, while appointing 1,000-plus new distributors in towns with population of 10,000. This expansion is further supplemented with a special drive for rural distribution of fresh products, ice cream and other dairy items.

“The consumers have realised the importance of food during the pandemic, and good and packaged food items from trusted brands have come to the fore. It is said that it takes 60 days to build a habit and imbibe new behaviour. We have seen this steady conversion over the last nine months and, hence, it is an irreversible trend now.”

“Amul is available across the country and is also affordable. It meets all the criteria of customers – it is trustworthy, available, visible and an affordable brand of choice for the future,” Mehta signs off.