A PROJECT REPORT ON “Distribution Channel of AMUL” in the subject International Marketing SUBMITTED TO UNIVERSITY OF MUMBAI FOR SEMESTER – IV OF M.COM. BY Mr. NIKHILESH N.PILLAY Roll No. 28 UNDER THE GUIDANCE OF Prof. SAURABH CHAVAN YEAR 2013 – 2014 CERTIFICATE This is to certify that the project entitled “Distribution Channel of AMUL” submitted by Mr. Nikhilesh N. Pillay student of M.Com. (Part-II) Management (University of Mumbai) Semester – IV examination has not been submitted for any other examination and does not form a part of any other course undergone by the candidate. It is further certified that he has completed all required phases of the project. This project is original to the best of our knowledge and has been accepted for Internal Assessment. Internal Examiner External Examiner Co-ordinator Principal College seal 2 ACKNOWLEDGEMENT At the beginning, I would like to thank GOD for his shower of blessing. The desire of completing this project was given by my guide Prof. Saurabh Chavan. I am very much thankful to him for the guidance, support and for sparing his precious time from a busy schedule. I would fail in my duty if I don‟t thank my parents who are pillars of my life. Finally I would express my gratitude to all those who directly and indirectly helped me in completing this project. Nikhilesh N.Pillay 3 DECLARATION BY THE STUDENT I, Nikhilesh N.Pillay student of M.Com. Part-II Management, hereby declare that the project for the Paper International Marketing titled, “Distribution Channel of AMUL” submitted by me to University of Mumbai, Semester – IV examination during the academic year 2013-2014, is based on actual work carried by me under the guidance and supervision of Prof. Saurabh Chavan. I further state that this work is original and not submitted anywhere else for any examination. Nikhilesh N. Pillay 4 Serial No. PARTICULARS Page No. Chapter 1 1.1 Executive Summary 7 1.2 Objective of Study 7 1.3 Review of Literature 7 Chapter 2 2.1 AMUL Story 9 2.2 Evolution of the cooperative movement 11 2.3 Operation Flood 14 Chapter 3 3.1 Overview GCMMF 20 3.2 ANAND Pattern 24 Chapter 4 4.1 AMUL- The Commercial Brand 28 4.2 BCG Matrix 30 4.3 SWOT 33 5 Chapter 5 5.1 Distribution 39 5.2 Supply chain framework 42 5.3 Problems and Issues 45 Chapter 6 6.1 Observation of issues 48 6.2 Recommendations and Suggestions 51 Chapter 7 7.1 Conclusion 54 7.2 Bibliography 56 6 1.1 EXECUTIVE SUMMARY Imagine going for a morning walk in the wee hours to a park, making a brief stopover and coming back home with a belly-full of tasty flavored milk and hot pizza topped with cheese! Defeats the purpose of the walk, but may make you feel on top of the world. Now, imagine the CEO of a dairy company saying, “Ours is not a food company, it is an IT company in the food business. The most efficient way of building links between milk producers and consumers so as to provide the best returns for both is through IT and innovation.” Or better still, imagine a cooperative movement that has delivered a Rs. 2746 crore turnover and has been planning actively to take it up to the 10000 crore mark. Amul India limited, and its team of energetic professionals have planned to take on HLL in ice-creams, Cadbury in chocolates, and NDDB in a verbal duel to uphold the cooperative movement. On top of all this, set up a retailing network that would be the toast of the town. 1.2 Objective of Study To understand what it takes to safeguard brand “AMUL” through its distribution channel. 1.3 Review of Literature It shows that, How a democratically owned and managed farmer organisation can successfully develop and sustain a commercial product in a national and overseas market with a sound and effective Distribution Channel. 7 Chapter 2 8 2.1 AMUL STORY Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement 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 2.8 million milk producers in Gujarat, India. AMUL is based in Anand, Gujarat and has been a sterling example of a co-operative organization's success in the long term. It is one of the best examples of co-operative achievement in the 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 has 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 world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.8 million producer members with 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. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of flooding the Japanese markets. Other potential markets being considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF. 9 2.1.1 MASCOT Since 1967 Amul products' mascot has been the very recognisable "Amul baby" (a chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and product wrappers with the equally recognisable tagline Utterly Butterly Delicious Amul.The mascot was first used for Amul butter. But in recent years in a second wave of ad campaign for Amul products, she has also been used for other product like ghee and milk. 10 2.2 EVOLUTION OF THE CO-OPERATIVE MOVEMENT One of the most powerful co-operative movements originating from the birth state of Mahatma Gandhi is responsible for the birth and growth of the popular FMCG brand- AMUL. Before the cooperative movement began, middlemen who supplied milk to the consumers were exploiting the dairy industry in the Kaira District. It began as a response to this exploitation and put an end to it. It grew because it responded to the farmers financially as well as with services. It has thrived because farmers who have a stake in its success, own it. And because it has been managed by capable professionals and strengthened by dedicated scientists, technologists and workers, it has forged ahead. Today in India, there are 75,000 dairy cooperative societies, spread all over the country with a membership of 10 million. The farmer in the village is now assured of a better future thanks to these cooperatives. Recently one of the European Embassies in Delhi requested Amul for information on the five biggest "companies" in the dairy business. The first three are in the cooperative sector - The Gujarat Cooperative Milk Marketing Federation (GCMMF), The Kaira District Cooperative Milk Producers' Union Limited and The Mehsana District Cooperative Milk Producers' Union. The Kaira District Cooperative is the second best in the country. It helped to create GCMMF, the apex body of all cooperatives in Gujarat. 2.2.1 - THE HUMBLE BEGINNING In the forties one firm - Polsons, dominated the dairy industry. Established by a rather enterprising gentleman who discovered that Kaira District, of what was then Bombay Presidency, produced a good deal of milk. He established a creamery and for a while the name Polsons was synonymous with butter - much as Amul is today. One of Polson's businesses was to supply milk to Bombay. As Kaira district was an abundant source of the commodity, Polson was chosen to procure it from there. He in turn, entered into an arrangement with a number of contractors who actually went to the villages and collected the milk. Everyone was happy. Bombay received reasonably good quality milk and Polson made a handsome profit. The contractors too 11 managed to earn large margins by over quoting the farmers. It was only the poor farmers who were unhappy for it. They invested in the animal feed and fodder and they put in their labor. Yet, it was they who received the smallest share of the Bombay consumers' rupee. The arrangement benefited everyone but them. 2.2.2 - THE FIRST STEP: FORMATION OF KAIRA UNION Realizing that something needed to be done about the unequal balance of wealth, they turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only chance of earning a decent income was when they themselves gained control over the resources they created. He also knew that the cooperatives offered them the best chance of gaining that control. So he advised them to stop selling milk to Polson and form a cooperative of their own. In his opinion they were to own their own dairy unit. He said, "Throw out Polson and his milk contractors". They followed his advice and the Kaira District Cooperative Milk Producers' Union (AMUL) was born, in 1946.