Amul adds zing to its kitty; broadens product portfolio

The dairy company is dipping its toes in a variety of F&B categories, from fizzy drinks to frozen foods

Amul adds zing to its kitty; broadens product portfolio
Amul is largely recognised as a dairy brand.

Amul’s parent company, Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), has been steadily broadening its product portfolio. After butter cookies in 2019, Amul has dabbled in several categories — sweets like motichoor laddu and besan laddu, chips, frozen snacks, and fizzy milk seltzers under its fruit juice brand Tru — in a bid to fortify its image as an FMCG brand, rather than a dairy brand.

In FY19-20, Amul earned a revenue of Rs 38,542 crore. Its value-added packaged products brought in about 45% of its annual turnover, while the milk pouches contributed the lion’s share of the business, registering a growth of 11% y-o-y. The value-added packaged products such as dahi, paneer, cheese and chocolates grew at 32%, 21%, 18%, and 27%, respectively.

Growing appetite

Amul has been expanding into milk-adjacent products for years. Analysts believe this is imperative for all FMCG brands. “The market structure demands a multi-product portfolio. It is a necessity for growth, stability and sustainability,” says Ankur Bisen, senior vice president, Technopak Advisors.

Between 2015 and 2019, Amul had reportedly introduced 101 products. In the last eight months alone, the brand “launched 58 new products and 127 different SKUs,” informs Jayen Mehta, senior general manager (planning and marketing), GCMMF.

Amul is avoiding putting all its eggs in one basket, as diversification opens up multiple avenues for incremental growth and profitability. Categories like cookies and sweets, which the company has recently forayed into, have high profit margins. “Another key factor is that dairy is a highly commoditised business, unlike categories like chocolates and cookies,” observes Lloyd Mathias, business strategist and angel investor.

Making it work

Amul is largely recognised as a dairy brand. How easy would it be to drive association with non-dairy products like potato wedges and puffed corn snacks?

Analysts say consumers are more likely to consider buying Amul products that are adjacent to milk and dairy. Hence, the company’s milk-based seltzer and sweets of any kind that need milk, ghee or butter — categories where Amul has a strong presence — could find takers. This is also why Amul’s frozen snacks portfolio includes paneer paratha and cheese ‘poppons’.

“Snacks and desserts are high-trial categories. When the options come from a reputed company like Amul, the hope is that consumers may be very willing to give them a shot,” says Anchit Chauhan, director – strategy, Dentsu Webchutney.

To create a distinct space for itself in the market, Amul has even locked horns with the industry biggies. For instance, Amul fought a legal battle to ensure that Hindustan Unilever’s Kwality Wall’s dessert is not classified as ‘ice-cream’, and instead marketed as a frozen dessert, because the company uses vegetable oil in its product and not real milk. Similarly, when Amul introduced butter biscuits, it took on Britannia’s Good Day claiming that Amul Butter cookies have “25% Amul butter”, whereas other butter cookies have only 0.3-3% butter. “These face-offs have helped Amul build authenticity in categories other than milk,” says Chauhan.

Mehta says, “While the Amul brand is known for milk and milk products, it also stands for true ingredients and nutritional products.” He is certain that with its value-for-money pricing, wide availability and quality ingredients, Amul will “make a place for itself in any category of choice”.

The company has extended the Amul brand name to several products — Amul Chocolates, Amul Rusk, Amul Motichoor Laddoo, and such. The fizzy drink and frozen food products have sub-brands, Tru and Happy Treats, but the packaging prominently carries the Amul name. Mathias believes having a different sub-brand is prudent to de-risk the parent brand, in case the products fail to take off.

The two most crucial pieces of the puzzle, however, are production and distribution. Mehta says that the company leverages its frozen distribution channel of ice-cream for frozen snacks and the product range is available pan-India. But, even two years after the launch of frozen snacks, the products are not as widely available as Amul’s butter and cheese.

Further, for products like sweets, where shelf-life is an impediment, the company needs to ramp up production capabilities across the country. The company is working on setting up new plants, creating supply chains, and developing region-specific products to enter other markets.

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