Amul, India’s largest dairy brand, is rapidly scaling up its portfolio of non-dairy products to become a total foods and beverages company to compete with Nestle, Britannia, Coca-Cola and ITC, its new managing director, Jayen Mehta, said.
Speaking to ET in his first interview after succeeding RS Sodhi in January at the Rs 61,000-crore brand owned by Gujarat Cooperative Milk Marketing Federation (GCMMF), Mehta, said: “Dairy remains our core, but we have a robust pipeline of growth; we want to straddle every foods category consumers use in the kitchen, and we are going about it with speed, scale and larger investments.”
The maker of Amul cheese, milk, ice-cream and butter has identified categories such as non-dairy beverages, snacks, pulses, cookies, edible oil, organic foods and frozen foods to accelerate with “speed and scale”, which Mehta said will be tailwinds of growth for the company. On the retail front, Amul is setting up ‘Ice Lounge’ parlours for premium ice creams.
“We are not worried about competition, since more players help in building products and categories. Having said that, we have to compete … we are competing with Coca-Cola with products like seltzers, with Britannia in cheese and cookies, with ITC in staples, and so on,” said Mehta, who has been associated with GCMMF for over three decades.
In November last year, Britannia announced a joint venture agreement with French cheese maker Bel SA to manufacture and sell cheese products, while Nestle and ITC have announced plans to push growth in manufacturing and innovation, with forecasts of a healthy revival in the FMCG sector.
On the record-high dairy inflation and milk prices being increased three times in the past year, Mehta said: “It was imperative to increase consumer prices, as cost of feed and fodder is a direct cost to the farmer. Besides, unseasonal rains and crop failure are factors that are not even reflected in topline inflation numbers.”
The cost index of cattle feed has been continuously increasing, which he said has to be calibrated into pricing decisions.
But indications are that inflation could stabilise with a normal monsoon, he said. “If the cost of production stays in control, we obviously won’t take more price increases and create unhappy consumers.”
Mehta said the dairy industry will continue its stance of objecting to free trade agreements in the sector, since milk coming from outside the country would hurt Indian farmers. “Milk is a source of livelihood for more than 10 crore families,” he added.
For fiscal 2021-22, GCMMF reported a consolidated cooperative group turnover of Rs 61,000 crore, 15% higher that the preceding fiscal year and well ahead of Hindustan Unilever, Nestle and ITC Foods in revenue. The cooperative attributed the surge in sales to post-pandemic recovery in out-of-home consumption, travel, catering and hospitality segments. While Amul’s milk-based beverages grew 36% by value, its ice-cream vertical posted a sharp revival with over 50% value growth in the year, the company said.
Mehta said the Amul model has the potential to go international, and that the cooperative’s core pillars of growth will include exports, dairy and organics.
Mehta said another core tailwind of growth is the government identifying the cooperative sector as a tool for development. The government has announced three new cooperative societies to promote organic products, seeds and exports, with a budget outlay of Rs 1,150.38 crore for 2023-24. “We are investing heavily in these societies with a mandate to accelerate exports and create a global marketplace,” he said.
Source : The Economic Times March