“We will scale our organics portfolio in a short time”: Amul’s Jayen Mehta

Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which markets Amul, the largest FMCG brand in India, is sponsoring the Indian contingent for the Asian Games in China beginning September 23, opening premium Ice Lounges and building a new health-food portfolio. In an interview to Storyboard18, GCMMF’s managing director in-charge, Jayen Mehta, spoke of Amul’s vision to become a complete foods brand with special focus on creating an affordable range of organic products and associating with sports to promote health and nutrition.

Edited excerpts:

What does it mean to be heading the country's largest FMCG brand?

I have been with GCMMF for the last 32 years so for me it is more of continuity. But in context it looks good because when I joined in 1991, Amul’s turnover was Rs 700 crore and it’s a 100-fold increase to Rs 72,000 crore. The time is exciting because even on this base, a multi-fold growth looks very possible and achievable.

With liberalization of the economy in 1991-92, protection for co-operatives vanished overnight and foreign capital could freely come in. We had to reinvent ourselves. We underwent the change management programme and implemented total quality management across the organization. The rest, as they say, is history. Amul emerged as the largest dairy brand and the largest FMCG brand.

The good part is that in the last one or two years, there's been a return of belief that co-operatives are a model which will work. We are seeing more focus on co-operatives with the Finance Minister announcing new policies and a new ministry of cooperation. Of seven lakh villages, India has about 2 lakh villages cooperative societies. We are talking of adding another 2 lakh village co-operative societies.

We have been given the opportunity to incubate two new multi-state cooperative societies and one is on organics. This is a big initiative where farmers will be encouraged to produce organic stuff and consumers will get products which are without chemicals, fertilizers and pesticides.

It's a very interesting time for not only doing what we've been doing at Amul but also building something new which will be even bigger and more lasting in times to come.

Is Amul getting into newer product categories in 2023 -- its golden jubilee year?

Though Amul dairy started in 1946, the marketing Federation was born in 1973, so, yes, it is our golden jubilee. Besides core dairy, there has been a sharp focus on new categories of late. After covid 19, we realized that immunity is very important. While we have been working in probiotics since 2006-2007, we recently converted all the pouch butter milk that we sell into a probiotic product without increasing the price. We sell close to 30 lakh litres of butter milk a day and it costs Rs 30 for a litre. There is no limit to growth opportunity in this.

Second is protein. We are the largest protein handlers in the country since we handle 3 crore litres of milk a day and milk has 3% protein. But once we make cheese from milk, what is left is whey protein. We are using that to make high protein lassi and buttermilk. Soon we will launch high protein yoghurt, ice cream, shakes, cookies and chocolates. We want to make protein available, affordable and tasty for the masses.

The high protein lassi and buttermilk is already sold online. In a month or two the remaining products will be rolled out and made available online.

What about offline retail distribution?

Eventually they will come to retail stores. We have yet to create awareness around these products. We will sell just one theory, that is, you need one gram of protein per kg of body weight every day for every member of your family and here’s our range which will not burn a hole in your pocket.

What about organic foods?

We have already launched 8-10 products such as organic atta, pulses, rice etc. We are soon launching organic sugar, jaggery, spices and tea – so practically every item you consume in your kitchen will be Amul Organic.

But, so far, the premium on organics has been much higher than what should be normal. Since the product is niche, the chain becomes dominant rather than the producer or the consumer. The retailer and trade margins are very high and the products are priced higher. So, the market remains small. If the market is small the channel will demand more. But we have to make organic food democratic and make it affordable to all.

In organics, the key is sourcing. We have to source an organic product from a certified farmer, do lab tests to see if it’s free from pesticides and heavy metals and then process it in an organic certified plant. The finished food has again to be tested the same way with same parameters, and then with the organic label it has to be sold in the market.

So it is this backend work which is taking time. We have set up our own lab at Gandhinagar to test the products and are also working with independent labs and certifying agencies.

But how will you ensure affordable pricing?

The farmer has to be slightly incentivized because he's sacrificing the productivity which he was otherwise thinking of getting through chemical fertilizers and pesticides. He needs time to convert from non-organic to organic. He needs to be educated. We need to commit that there will be a market for his organic produce. We are working with several farmer associations across the country.

It is by no means an easy journey. But we will scale it up in a very big way in a very short time.

Does this mean that Amul’s dairy business may become smaller?

Milk will remain big. Our entire structure – the 3.6 million farmers, thousands of cooperative societies, 98 dairy plants – are all dependent on milk. Milk is consumed 365 days, across all households and gives Amul a chance to enter homes. Our way to your home is already there. Now I have to increase my share of your “thali” which gives us a huge opportunity.

What was the trigger behind Amul’s new premium Ice Lounges?

We are doubling our capacity and the ice cream business has been doing very well. But the Indian consumer is also wanting to experiment. So we got this concept of bringing you the best ice cream flavours in every country in the world through Ice Lounges. We are looking at the premium segment and looking to open in the best malls and airports. We plan to have 100 lounges here and 100 outside India.

How much does Amul spend on advertising? Have you increased your advertising and sponsorship budget?

We've been consistently spending one percent of our turnover on advertising all these years and we will continue to be within that range.

We are big on sports too. In the cricket Asia Cup we were on the ground and on television. It’s too early to announce, but we are tying up with teams for the cricket World Cup. For Women’s IPL we are the beverage partner for three years.

We are now the official sponsor of the Indian contingent for the Asian Games. We associate with sports because that audience is turning out to be very, very core for us, especially since we promote health, nutrition and energy. Besides, anything to do with live sports has good viewership so it is a good combination.