GCMMF is taking on transnationals across a clutch of product categories. But can a co-operative with limited financial means stand up to the might of these MNCs? And will its USP of cost continue to stay relevant?

By Shailesh Dobhal

It is the defining moment in the meeting with Bharat Mahenderbhai Vyas, the 51-year-old managing director of the Gujarat Co-operative Milk Marketing Federation (GCMMF), popularly known as Amul, after its larger than life brand. One of his colleagues, Sanjay Panigrahi, the general manager in-charge of the confectionery business explains how Amul proposes to enhance its portfolio with the launch of éclairs branded Chocolair and Milklair. ''Get your focus right,'' snaps Vyas. ''We are into Re 1 confectionery; product-led segmentation will not work in this price sensitive category.''

That's Vyas: self-confessed gourmand, GCMMF-lifer, and keeper of the faith. Faith, in the case of the Rs 2,258 crore co-operative he heads, is price-leadership.

For, this is the basis of his strategy to make Amul India's best-known food brand, not just its most popular milk, butter, and cheese one. The numerical target? A turnover in excess of Rs 10,000 crore by 2006-7.

There's a minor issue of competition. Amul's ambitions have put it squarely in the radar of transnational marketing giants. Pizza Hut, Domino's, Cadbury, Nestlé, Britannia, Hindustan Lever Limited-pick a marketing major and chances are, Amul will be competing with it in one product category or another.

Does this intimidate Vyas? Not quite. ''We know the modus operandi of the MNCs,'' he brags. ''We'll embarrass them everywhere.'' Those words are typical of Vyas. Both he and the man who created Amul, its chairman, Dr. Verghese Kurien are critical of the way MNCs have gone about their business in India.

A Patchy Record

In the context of Amul's past performance Vyas' words reek of bravado, nothing else. The co-operative's fight with HLL in ice cream, starting with its entry into the market five years ago, is well documented. The winner? HLL with a 40 per cent share of the 60 million litres a year (organised) market, although Amul is second with 27 per cent. Then, there is its performance in chocolates, a category it entered 27 years ago. Market leader Cadbury boasts a share of 70 per cent; Amul is a very distant third with 2 per cent.

Amul's obsession with price is only to be expected. It sources milk from over two million dairy farmers in Gujarat and is highly cost competitive. But the obsession cuts both ways. It has often blinded the co-operative to opportunities. Between 1983, when it launched a cheese spread and a dairy whitener and 1996, when it did ice cream and condensed milk, Amul was content to remain in launch-limbo. Since then, of course, things have changed. Today, Amul is ''everywhere'' as Vyas claims it to be: from cottage cheese (paneer) to gulab jamun, packaged long-life milk to curd, cheese to pizzas, confectionery to ice cream mixes, and baby foods to ice creams.

''Amul is a brand worthy of the trust of 1,000 million Indians,'' says Verghese Kurien, the octogenarian who is the chairman of GCMMF and the icon of the co-operative movement in India. ''Why should it just be a label for butter?''

That argument has been translated into a numerical goal for Amul: today, just about 15 per cent of GCMMF's revenues come from value-added offerings like long life milk, ice cream, curd, and gulab jamuns; in the next five years, the co-op wants to see this increase to 35 per cent. ''To do this, the number of consumers interacting with Amul has to grow at a faster rate than that of those interacting with any of my competitors,'' says Vyas.

Marketing Overdrive

To do this, Amul has moved its marketing efforts up a gear. In the pizza market, for instance, it first tested the waters with an unbranded mozzarella cheese pizza. Satisfied that there is a market for frozen pizzas, it has now soft-launched the Utterly Delicious brand. Over the next two to three months, it will work out issues related to packaging and distribution before bestowing the Amul brand name on the product. Similarly, Snowcap is GCMMF's test-brand in the ice cream mixes category.

Amul hopes to have sold 100,000 pizzas per day by end of day, March 31, 2002. With 3,000 outlets doing the selling, and a price-tag of Rs 25 for an mid-sized pizza (8 inches in diameter if you are one of those people for whom size matters) that target is well within the realm of the possible, but the competition is having none of it. ''We will not allow anyone to walk away with our customers in the northern market,'' says Gurreet Singh, General Manager (Operations), Nirula's, a New-Delhi based fast food chain that sells 5,000 pizzas a day. Now, taking a leaf from GCMMF's book, Nirula's is set to launch frozen pizzas in six flavours in the Delhi market.

Other competitors are, literally, blasé. ''We have no plans to lower prizes (to combat Amul),'' says Pankaj Batra, Marketing Director (Subcontinent), Tricon Restaurants, the company that runs 21 Pizza Hut outlets across 10 Indian cities.

Competitors in other categories are downright derisive of Amul's efforts. ''Amul has been growing its market share; (but it has made) no efforts to grow the ice cream category,'' says J.H. Mehta, Executive Director, Ice Cream, HLL. GCMMF's General Manager in-charge of marketing R.S. Sodhi counters that the company's immediate objective with Snowcap (the ice cream mix) is to ''create a market for ice cream mixes, not necessarily for Amul ice cream itself.''But with both competitors eyeing the lucrative 75-100 crore units a year ice-cream-in-a-cone market, a clash is imminent. Over the next three years, HLL plans to sell its offering in this category, Kwality Walls Softy & Creamy, from over 1,000 machines. Vyas' response is a quiet, ''we know just how to tackle the competition.''

No surprises for getting that one right-price it is. Thus, GCMMF's milk-based confectionery will take on HLL's sugar confectionery brand Max in the sub-Re 1 segment. Even in a category like long-life milk targeting high-end consumers, Amul competes with Nestlé primarily on the plank of price-competitiveness.

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