Amul India – Formed in 1956, is a cooperative brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers in Gujarat has today and has grown into a 42,000-crore company spread across various segments.
The Indian Biscuit industry is worth about Rs 25,000 crores and is mainly dominated by 3 players
1) Britannia…The market leader with close to 34% market share
2) Parle
3) ITC
So when Amul decided to enter the biscuit market it was sure to kick up a storm…
The first storm brewed when Amul put out an advertisement with claims that Amul butter cookies are made out of 100 per cent dairy fat, while competition largely uses vegetable fat and very little dairy fat. The social media campaign declared that its new range of butter cookies contain 25% butter, whereas other brands have no more than 3%.
The ad further invited viewers to check the nutritional information on the packaging of rival brands and send in pictures, for which they would receive an Amul hamper… To amplify this messaging, they also launched a contest on Twitter and Instagram, encouraging consumers to put up pictures of any brand of butter cookie and share their butter content.
This comparative ad campaign brought back memories of the strategy adopted by Amul when it entered the ice cream segment …Let’s understand what happened back then..
Amul took on the then market leaders Unilever by using the campaign of “Real Milk” – “Real Ice-cream”
The contention by Amul then was that all other brands were using vegetable oil in place of milk and hence they should not be called as ice cream but as frozen dessert…The then market leaders Unilever and Vadilal responded to the advertisements by taking the same to court.What the court observed was that as per The Food Safety and Standards Regulations Rules, 2011 of India
Section 2.1.7 sub sections (1) and (3) of the Rules note –
· “Ice Cream means the product obtained by freezing a pasteurized mix prepared from milk and /or other products derived from milk.”
· “Frozen Dessert means the product obtained by freezing a pasteurized mix prepared with milk fat and / or edible vegetable oils.”
So Unilever had to recategorize their products as frozen dessert…
But was this the only reason for the huge success of the Amul ice cream which has made it the clear market leader in that segment?
Below are some the factors that propelled it to market leadership
1. Aggressive pricing which increased the user base dramatically…Further improvement by improving efficiency of the distribution
2. Focused distribution growth where each key market was targeted for market leadership before moving on
3. Strategic and cheaper cold chain using better and better scale which further drove down prices
4. Alliance with the local cooperatives for faster scale up
5. Aggressive promotions which took the fight to the existing market leaders
In the biscuit segment only the first shots have been fired but the strategy being adopted by Amul based on purity looks very similar to the one that they adopted in ice-creams…
One big differentiator till date is the pricing ..While in ice-creams Amul had priced their products at much lower levels than the market leaders the same does not seem to be the case in biscuits
Amul’s butter cookies are priced at a premium than Britannia’s Good Day or ITC’s Mom’s Magic. A 40-gram pack is priced at Rs 10, while Britannia has priced its butter cookies at Rs 5 for a 40-gram pack.
It is still early days to rate on the other parameters as Amul has presently entered only the Gujarat and Maharashtra markets with its cookies. ..But these were the same markets from where they started the ice cream journey also…
The vegetable oil cookie pictured in the Amul ad is indeed Good Day from Britannia, with which it also competes in the dairy category. Britannia finally countered with its own ad, which points out that the Amul Butter Cookie, with 25% butter, contains seven times more cholesterol than Good Day.
As the disruptor takes on the market leader and vice versa it calls for interesting action in this space…
