Packaged dairy products offers healthy cash flows : R S Sodhi Amul

Amid growing consumer preference for branded packaged foods due to trust and safety concerns, dairy major Amul has started witnessing its packed dairy products business matching the revenues generated from the branded liquid milk sales.

Of the average 250 lakh litres of milk that Amul processes on a daily basis, nearly 140 lakh litres is branded liquid milk under different variants of ‘Amul milk’. The remaining 110 lakh litres is converted into a variety of dairy and food products including cheese, butter, ghee, paneer, yogurt, ice creams, among others.

Post-Covid preferences

Sharing an insight about the transition of consumer choice towards packaged branded foods, RS Sodhi, Managing Director of the Gujarat Cooperative Milk Marketing Federation (GCMMF), said: “If you see the value, the share of liquid milk and that of packed dairy products is 50-50. This is natural, because the value of dairy products may be more than the branded liquid milk that we sell.”

Notably, Amul had already started capitalising on the changing consumer preference, as it launched more than 30 products in the first four months of 2020, two of which were lockdown months.

“Surely, the post-Covid time is positive for food — especially for packed, trustworthy and affordable brands. We have seen across all product categories the demand for branded Amul products, be it ghee, paneer, cheese, butter all have increased tremendously. We are also getting more milk because unorganised dairies are not taking it; so supply isn’t a problem, and demand is not a problem either. That way, we are optimistic of achieving 15-20 per cent growth in branded consumer dairy products,” said Sodhi.

Geographical production

Enthused by the growth across its product verticals, Amul is now stretching its arms to cover as many geographies as possible. Sodhi said that after setting up milk processing facilities in the Jammu region, Amul will also start operations in Kashmir Valley in the next couple of months.

“Opening new territories for milk procurement, milk processing and milk marketing is a continuous exercise at Amul. We have already tested waters in Bihar and Jharkhand and now plan to go more aggressive in these States including North East. We will start milk procurement in the North-East as well,” Sodhi told Businessline.

Apart from the eastern markets, Amul is also eyeing the South Indian market with its foray into Odisha and Andhra Pradesh. Andhra Pradesh’s milk production is almost similar to Gujarat, and the State government has also extended its support to develop an “Amul-model” of cooperative dairying.

“We will collect milk from farmers in Andhra Pradesh, process it and cover the nearby markets like Chennai, Hyderabad, Vijaywada, Vizag, Bengaluru etc. This way, Andhra Pradesh, Tamil Nadu and Telangana are the markets that we will get into over the next one-two years,” said Sodhi.

Geographic expansions will not just add markets to Amul’s kitty but will also lead to expansion in its procurement and processing capacities from the existing about 380 lakh litres per day to about 430 lakh litres per day. To augment additional capacities develop products in dairy and non-dairy segments, Amul looks to invest approximately ₹1,500-2,000 crore over the next two years.

The dairy behemoth has set a target to double its turnover from the current ₹50,000 crore to ₹1 lakh crore by 2025.