Sunday, September 9, 2012
Amul Saga by Dr. Verghese Kurien
There are a some people that we are compelled to admire for their tremendous service to the nation, and one of them is Verghese Kurien. The "father of the Indian White Revolution", the man behind the Amul Milk revolution and made the leading producer of milk in the world. Now, that's something to talk about.
He laid the foundation of a democratic enterprise and always gave prime importance to economic justive with the people's involvement in placing technology and professional attitude in the hands of the common man. He is exemplary hero for true development.
His leadership set the country on the track to self-reliance in milk, fruits, edible oils and vegetables. And Varghese Kurien eliminated the middle men thereby promoting higher productivity.
The Amul Saga
The success of the Amul brand name has, no doubt, resulted in my being asked to comment on its history and the reasons for its success. I have, therefore, reflected on the long history of the brand to see if I could distil reasons why Amul is a name widely recognised and respected, not just in our cities and towns, but in our villages as well.
Probably the easy, but nonetheless wrong, answer is that Amul has been advertised well. Certainly it has helped that those responsible for keeping the Amul name in the public eye have used considerable imagination and, if I do say so, ‘The taste of India’ is nothing short of brilliant. However, there is much more to it.
A successful consumer product is the object of thousands, even tens of thousands of transactions every day. In these transactions, the brand name serves in lieu of a contract. It is the assurance to the buyer that her specifications will be met. It is the seller’s assurance that quality is being provided at a fair price.
If Amul has become a successful brand – if, in the trade lingo, it enjoys brand equity – then it is because we have honoured our contract with consumers for close to fifty years. If we had failed to do so, then Amul would have been consigned to the dustbin of history, along with thousands of other brands.
The tough part of the use of a brand as a contract is that every day is a renewal; if, just once, the brand fails to meet the customer’s expectations or, more exactly, if it fails to delight the customer, then the contract loses its value. If Amul’s sales continue to rise, it is because that contract has been honoured, again and again. I would like to think that the granddaughters of some of our first customers are now ‘contracting’ with us to buy their butter, cheese, baby food, chocolates and other fine Amul products. It is also a fact that when we first thought of exporting to West Asia and even to the United States, it was because of the loyalty of Amul customers who, even when far from home, still craved our ‘taste of India’.
What goes into the ‘contract’ that is a brand name? First is quality. No brand survives long if its quality does not equal or exceed what the buyer expects. There simply can be no compromise. That’s the essence of the contract. In the case of a food product, this means that the brand must always represent the highest hygienic, bacteriological and organoleptic standards. It must taste good, and it must be good.
Second, the contract requires value for money. If our customer buys an Amul product, she gets what she pays for, and more. We have always taken pride in the fact that while we earn a good income for our owners – the dairy farmers of Gujarat – we don’t do it at the cost of exploiting the consumer. Even when adverse conditions have reduced supplies of products like butter, we have resisted the common practice of raising prices, charging what the market would bear. Rather, we have kept prices fair and done our best to ensure that retailers do not gain at the consumers’ expense.
The third element of the contract is availability. A brand should be available when and where the customer wants it. There is no benefit achieved in creating a positive brand image, and then being unable to supply the customer who wants to buy it. In our case, over the years we have built what is probably the nation’s finest distribution network. We reach hundreds of cities and towns through a cold chain that not only ensures that our products are available, but they reach the customer at the farthest end of the country with the same quality as you would find in Ahmedabad or Vadodara.
The fourth part of the contract is service. We have a commitment to total quality. But, occasionally, we may make a mistake – or, our customer may think we’ve made a mistake, and the customer, as they say, is always right. That is why, for Amul, every customer complaint must be heard – not just listened to. And, every customer complaint must be rectified to the extent humanly possible.
For close to fifty years now, Amul has honoured its contract with the consumer. The contract that is symbolised by the Amul brand means quality. It means value for money. It means availability. And it means service.
How did the Amul brand become what it is? To answer that, we must journey back in time, to the history books, to the time of India’s independence because Amul’s birth is indelibly linked to the freedom movement in India. It was Sardar Vallabhbhai Patel who said that if the farmers of India are to get economic freedom then they must get out of the clutches of the ‘middlemen’.
The first Amul cooperative was the result of a farmers’ meeting in Samarkha (Kaira district, Gujarat) on 4 January 1946, called by Morarji Desai under the advice from Sardar Vallabhbhai Patel, to fight rapacious milk contractors. It was Sardar’s vision to organise farmers, to have them gain control over production, procurement and marketing by entrusting the task of managing these to qualified professionals, thereby eliminating the middle men, the bane in farmers’ prosperity.
The decision was taken that day in January 1946: Milk producers’ cooperatives in villages, federated into a district union, should alone handle the sale of milk from Kaira to the government-run Bombay Milk Scheme. This was the origin of the Anand pattern of cooperatives. The colonial government refused to deal with the cooperative. The farmers called a milk strike. After fifteen days the government capitulated. This was the beginning of Kaira District Cooperative Milk Producers’ Union Ltd., Anand, registered on 14 December 1946.
Originally the Anand pattern included dairy cooperative societies at the village level, and a processing unit called a ‘union’ at the district level. Inspired by the Kaira Union, similar milk unions came up in other districts too. In 1973, in order to market their products more effectively and economically, they formed the Gujarat Cooperative Milk Marketing Federation Limited (GCMMF Ltd.). GCMMF became the sole marketer of the original range of Amul products including milk powder and butter. That range has since grown to include ice cream, ghee, cheese, chocolates, shrikhand, paneer, and so on. These products have made Amul a leading food brand in India.
The brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a quality control expert in Anand. The first products with the Amul brand name were launched in 1955. Since then, they have been in use in millions of homes in all parts of India, and beyond. Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of availability, of service.
There is something more, though, that makes the Amul brand special and that something is the reason for our commitment to quality and value for money. Amul is the brand name of 2 million farmers, members of 10,000 village dairy cooperative societies throughout Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga.
In the early days of Kaira Union there was no dearth of cynics. Could ‘natives’ handle sophisticated dairy equipment? Could western-style milk products be processed from buffalo milk? Could a humble farmers’ cooperative market butter and cheese to sophisticated urban consumers? The Amul team – farmers and professionals – confounded the cynics by processing a variety of high-grade dairy products, several of them for the first time from buffalo milk, and marketing them nationally against tough competition.
What began way back in 1946 was really an effort to carve out a truly Indian company that would have the involvement of millions of Indians and place direct control in the hands of the farmers. It was a mandate for producing, owning and marketing and above all, building your own truly Indian Brand. And successfully at that.
You will appreciate that when the lives of lakhs of farmers depend on a brand, and when your history is grounded in the Independence movement, when not only competitors but even your own government questions you, then your resolve to be the best is like the finest steel.
Amul, therefore, is a brand with a difference. That difference manifests itself in a larger than life purpose. The purpose – freedom to farmers by giving total control over procurement, production and marketing. Amul and all other milk products produced by cooperatives were born in struggle. It was the producers’ struggle for command over the resources that they create, a struggle to obtain equitable returns and a struggle for liberation from dependence on middlemen. It was a struggle against exploitation. A refusal to be cowed down in the face of what others believed to be the impossible.
Amul’s birth was thus a harbinger of the economic independence of our farmer brethren. Amul’s mission was the development of farmers, nutrition to the nation, and heart in heart, the real development of India.
Given India’s vast geographical spread, the country had very few dairy plants at the time of independence. As the then Prime Minister Lal Bahadur Shastri had said, ‘One Amul is not sufficient. Many Amuls are the need of the hour.’ This led to replication of the Anand pattern through the Operation Flood programme which has, amongst others, three major achievements to its credit, namely: making dairying India’s largest self-sustainable rural employment programme, bringing India close to self-sufficiency in milk production, and trebling the nation’s milk production within a span of two and a half decades to make India the world’s largest milk producer.
Today, 173 milk producers cooperative unions and 22 federations play a major role in meeting the demand for packed milk and milk products. Quality packed milk is now available in more than 1,000 cities throughout the length and breadth of India. And this is milk with a difference – pasteurized, packaged, branded, owned by farmers – carrying the milk drop logo, like Amul, a symbol of quality.
Over the course of Operation Flood, milk has been transformed from a commodity into a brand, from insufficient production to self sufficient production, from rationing to plentiful availability, from loose, unhygienic milk to milk that is pure and sure, from subjugation to a symbol of farmer’s economic independence, to being the consumer’s greatest insurance policy for good health.
What of the future? India’s population has risen from 350 million in 1950 to 1,000 million today. As cities draw people to new employment opportunities, the current urban-rural ratio of 26:74 is likely to become 33:67 by the year 2010. As per available projections, the population by the year 2010 would touch 1,190 million people. This means that by the year 2010, rural India will be required to support some 800 million people, an increase of 11% over 1999’s 720 million rural people.
Based on the current population demographics and projections, we estimate that there will be 260 million women in the age-group of 15-59 years in India by the year 2010 and this would further increase to 302 million by the year 2020, of which only 100 million would be literate. This means that rural women will comprise 21% of India’s total population. In our country, most rural women contribute to agricultural and dairying activities – apart from the household work – and their activities are not included in India’s GDP despite their significant contribution. Dairying is, therefore, very important to our rural women. For many, it is their main source of employment and income, incomes that they often manage themselves.
Population gives us one picture. The other is provided by the demand for household commodities. By 2010, the national requirement for food grains will touch 266 million metric ton, rising to 343 mmt by 2020. For milk, estimated consumption will be 153 mmt by 2010 and 271 mmt by 2020. For edible oils, demand will soar to 9 mmt by 2010 and 13 mmt by 2020.
It should be clear that agriculture will remain the most important engine of our economy. Amul and its cooperative sister brands are aware of this challenge. The future, they say, is at best a mystery. But, it should be clear that the needs of a nation on the move must be met. The country is young. There are more working women. The needs of an ever-growing population have to be met with sustainable economic development. And the demand for milk and milk products, therefore, is only going to grow further. Couple this with the nutritional needs of the new and the old generations and it is equally clear that there will be a need for more value added milk products. This calls for production to be enhanced at even faster rate than it is at present.
There is also something very special about milk, something which requires that any brand for milk and milk products to act not simply as a seller, but as a trustee. Milk is not a white good or a brown good. It is not something people save their entire lives in order to buy – like a car, or a house. Milk is not a status symbol; rather it is the symbol of nutrition. Milk is a nearly complete food, providing protein, vitamins, minerals and other nutrients so essential to maintaining good health.
We realise the value of milk on the day the milkman does not bring it to our doorstep, when our children have to go to school without it, when we go without our daily cup of coffee or tea. And what would our lives be like without ghee, butter, cheese, curd, lassi, chaas and the like. Milk is not only an ingredient in our favourite recipes, it is an essential ingredient of life itself. And, by its very indispensable nature, it has one of the biggest markets – a whopping 82 mmt at a very conservative consumption of just 214 grams per day per person in India alone.
Our commitment to the producer, and our contract with the consumer are the reasons we are confident that cooperative brands, like Amul, will have an even bigger role to play in the next fifty years. Resources need to be deployed with a purpose and a commitment to deliver better results. There is no limit for a marketing exercise then. It must build India and its culture a second time round. An India, that is the land of our dreams.