The story of Amul: Unlocking in the Lockdown

The story of Amul during lockdown is quite in contrast to that of other brands.

Double-digit growth in sales turnover, consistent supply, and more than 100% capacity utilization of factories. These conditions sound like a long lost dream for a company in the current scenario, right? Not for Amul India!

The company has been soaring high and mighty in all aspects of business performance. One can almost say that to a large extent, the lockdown has been a positive stimulus for the cooperative giant.

The story of Amul: Unlocking in the Lockdown
How?

When the lockdown began on March 25, 2020, Indians witnessed a gradual change in consumption patterns. With restaurants and eateries having shut shop, even the fussy eaters and the “no-cook experts” had to cook a meal for themselves.

This is what Amul India found out. And, that’s when their business witnessed a turning point in its strategy.

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Amul’s Dairy Product Portfolio: You can read their BCG matrix here

With everyone now (willingly or unwillingly) cooking, the demand for groceries jumped. And, with large modern stores shut, our local Kirana stores became the store of choice for all of us. Ah. The respect they deserve!

Anyway, here comes the 1st factor of Amul India’s success It’s large distribution network of 10,000 dealers and 10,00,000 retailers all across the country. When most companies had to halt production due to lack of labour and demand… Amul India chose to play it differently. Its tetra pack milk, cheese, and butter products have witnessed a 30%-40% rise in demand over the first quarter of 2020. A large part of this rise is credited to the change in buying behaviour of consumers during the lockdown. Consumers wanted packaged foods more than fresh ingredients. And, with packaged products, a consumer would prefer a known brand over any local names in the store. So, of course, Amul’s 70-year-old legacy was at play when it came to consumers having to choose what brand to buy.

The Rising Demand

Okay, so we have the supply sorted, but how did Amul cater to such a huge demand spur in the market despite the lockdown? Especially when most companies were facing labor problems.

Here’s how – the MD of Amul India Mr RS Sodhi was quick in identifying the early shift in consumer preference for packaged products and daily essentials like milk, butter and ghee. So, he decided to take charge of the production centres of Amul products. And essentially, cater to the needs of the 3.6 million farmers across 18,700 villages of Gujarat who supplied the company with 23 million litres of milk every day. That’s a big number.

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(A still from Amul’s factory during production amidst COVID-19)

Mr RS Sodhi then ensured housing facilities with proper sanitation in Amul’s factories. This was done by arranging passes for its network of farmers to travel and bring their milk supply to the nearest Amul collection centre. Further, increasing its margins on products to compensate its distribution channel partners for taking the extra risk for stepping out of their houses to cater to the need of the business. So basically paying the distributors and retailers a little more than what they usually do. These are some of the key steps taken by Amul during this time that has enabled smooth business operations and given millions of Indians access to their products even in the remotest of regions.

A customer from Kerala even said in an interview that there was a shortage of biscuits in their local Kirana stores for many weeks. But, the only brand that was always available was Amul butter cookies and chocolates. Which is huge!

The story of Amul, my friend, does not end here. There’s more!

Doubling Marketing spend

While most companies were cutting their costs and barely keeping their head’s above the water… Amul decided to double its spend on marketing during the lockdown and chose to go the path less travelled. The reason if one were to understand it, was simple. The Brand Image.

As per the company’s managing director, they never really saw any logic in stopping their advertising spend in the first place. They look at their customer segment as their family. And so, RS Sodhi rightly mentioned that in times of distress, you don’t leave your family alone, you talk to them. For Amul, their loyal customer segment was their family. So, they revisited their marketing strategy and went both traditional and digital at the same time.

Most of us remember the week when Ramayana was touted to be the most-watched show on Indian television right? Well, Amul looked at that opportunity quite differently and came out with its Ramayana themed ad with the utterly butterly delicious tag lined Amul girl. This was only the start of Amul’s digital advertising strategy and creating consistent brand recall in the minds of its consumers.

After a while, it had almost become second nature for Amul to come out with an ad related to what’s happening in the country and around the world. To put it in perspective, Amul’s ad volumes during the month of April and May 2020 had witnessed a 316% increase as compared to April and May 2019.

The Nostalgia

Along with this, Amul started advertising its Amul cool and other packaged goods on TV; Given it was the most used medium of interaction by its customers. The company’s advertisements got 10 times more views than the Indian Premier League! At 1/10th of the cost! stated by their marketing head. So, a play of nostalgia with old ads, novel presence in the digital space through carefully curated social media ads and an efficient supply chain to ensure the reach of all its products. This was Amul’s lockdown strategy to not only stay afloat… but also to soar and exceed its turnover projections for the first quarter of 2020 by 2%. Essentially making it a huge management success story with a whopping 17% increase in sales turnover and raising its sales to more than pre-COVID levels.

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But wait, there’s more

The company, however, did not stop here. During the first quarter of 2020, the company introduced 33 new products into the market. The highest number of new product launches for the company in a single quarter. These products were not just a typical product line extension. But, a carefully calculated move by Amul keeping in mind its existing dominant presence in the market and the changing consumer tastes and preferences. It has come out with ‘Haldi Doodh’ and ‘Panchamrit’ keeping in mind the need and psychology of Indian consumers to build immunity and feel protected from the COVID.

Along with that, the company plans to set up a large potato processing plant in North Gujarat to roll out packaged products like French fries, Amul Parathas etc. and position these products as nutritious alternatives for the family and encourage consumers to indulge in street food delicacies at home itself.

The current story

Amul’s most recent foray is into the cooking oil segment with the product ‘Janmay’ (meaning newly born). It is a move catering to support the make in India movement launched by Shri Narendra Modi. India currently is the world’s largest importer of oil and caters to 65% of national demand for oil through imports. With 3.6 million farmers in Amul’s production network, many of whom produce various oil-producing seeds as well. It only makes sense for Amul India to leverage its existing network and fill the identified gaps in the current market at an optimum cost.

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Amul India now has its eyes set to conquer the remainder of FY 2020 with its new product launch strategy. Without a question, powered by its consistent and quality marketing communication with its customers. It’s interesting when you look at the company’s moves carefully in retrospect. They didn’t do anything extraordinary, it was simply about the careful understanding of their target market; identifying the right time to interact with the country; And of course, at the core of it all, optimize and manage the business value chain smoothly.

Author

The piece was penned by Sidhant Satapathy, a student at TAPMI. The piece is brilliantly written! Share this with your best friend on WhatsApp.

We have a piece on BCG Matrix of Amul, read it here. If you want regular updates about new pieces, follow us here.

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