Description
milk foundation GCMMF sells products under AMul brand and this document focues on rural marketing efforts considering comapny, cosumer, competitor analysis alongwith ANsoff matrix, market penetration, product, market development and diversification strategies.
Gujarat Co-operative Milk Marketing Federation
Table of Contents
Issues /Problems in the case:............................................................................................2 Market potential/market analysis:...................................................................................3 Company.........................................................................................................................5 Consumer:......................................................................................................................7 Competitor:.....................................................................................................................7 Alternatives:.......................................................................................................................8 Market Penetration.........................................................................................................9 Product Development ..................................................................................................10 Market Development ....................................................................................................10 Market development and diversification related with processed food sector (fruits & vegetables)...................................................................................................................11
Introduction GCMMF is a state level federation is the nodal agency concerned with the marketing of products produced by the different milk co-operative member societies of the state of Gujarat and for other states marketing their products under the Amul brand name. As years passed by Amul has grown into a brand that every Indian can associate themselves with in their everyday lives. From milk and milk based derivatives; edible oil under the ‘Dhara’ brand name, ice-creams and fruit based derivatives under the ‘Safal’ brand name GCMMF has grown into from an organization with annual revenues of Rs. 7.6 billion in 93-94 to Rs. 18.1 billion in 98-99.
Issues /Problems in the case: But what is the road going ahead in the new millennium?
GCMMF consists of a three tier co-operative set up organization set up initially with a development motive to streamline milk procurement and act as a nodal agency for marketing the various products produced by the district unions. The year 2000 has seen saturation in terms of milk consumption. Whether to stick to its core business of dairy products or diversify into other products such as processed foods (jams, sauces and fruit juices)? ? Co-operatives as a management setup going into the new millennium; can it stand up to competition. This issue has come up because they believe the co-operative system does not get a level playing field with the giant corporates. ? How to identify the growth drivers going into the new millennium with changing environmental and consumer preferences? ? Can the Anand pattern be replicated across other product lines which hold tremendous potential (For ex: processed food sector)? ? There still exists tremendous potential in milk and milk based products (India avj-225 gms, World-600 gms); how to modify the current strategy in achieving this objective ? In the year 2000 there is tremendous competition from MNC players in the food processed segment. Will GCMMF able to counter competition effectively?
?
Market potential/market analysis: ? The Indian milk consumption was 225 gms per day compared to 600 gms per day in developed countries. Hence there exists tremendous potential in India itself. The product portfolio of GCMMF comprises a large chunk of such products; hence its efforts could be focused on targeting the Indian consumers with these products. ? The rural-urban consumption disparity stands at 121 gms vs. 400 gms. Hence rural consumption holds tremendous potential. ? Out of GCMMF’s total income of Rs. 18 billion in 98-99; the share of processed fruits and vegetables is quite small. Considering that there still exists a very nascent supply
chain and this being the major focus area of MNC’s.; this product line holds tremendous potential for GCMMF going into the new millennium. ? NDDB has played a crucial role in the promotion of dairy activities instituted by the government of India. The management and knowledge of this governmental organization could be leveraged in other areas. ? Exports in milk and processed food products are on the rise; hence there exists brand equity for these products outside India. This augments well for players in this sector. ? Production has increased by 5.3 % for fruits and vegetables; this national growth rate is higher than some of GCMMF’s existing businesses; hence there exists a window of opportunity for the same. This is also compounded by the fact that the total demand for fruits and vegetables would grow to 169 million tonnes by 2010 and only 1.3% was processed commercially compared to 70-80% in other developed and developing countries. ? An improved per capita income and living standards; there is a general shift in the eating habits of Indian towards premium food. Hence GCMMF has an opportunity towards probiotic and health conscious products. ? India’s processed food market currently estimated at Rs. 20 billion and the absence of organized co-operatives in this sector does hold potential for GCMMF. ? The food processing industry is extremely fragmented and the absence of a power brand in this sector does hold potential for GCMMF in building this sector. ? A highly inefficient food logistics and distribution system o Production, storage and handling facilities are poor o 35% of fruit and vegetable production wasted due to the inefficient supply chain, hence resulting in potential loss of revenue. o The markup at every stage is high, commission ranging from 25-30% at every stage; hence this presents GCMMF an opportunity for disintermediation thereby bringing in efficiencies in the existing supply chain. Another important conclusion is that there exists an opportunity to make a profit. Analysis with the help of the 3 C’s:
Company ? Co-operative setup of GCMMF. o GCMMF was formed to be the marketing agency for marketing the products produced by the milk societies/district unions and registered as a co-operative society in 1973. Hence we need to understand that the ideology behind a cooperative setup is very different from a traditional corporate setup. Such organizations differ in terms of their goals and objectives. The main objective of such co-operative organizations is first benefits for its members and social equity amongst them. Such organizations are driven by these ideals and hence their functioning would be different from the traditional corporate setups. o A co-operative setup is the best connected to the grassroot farmer and they understand the benefits of being associated and India largely being an agrarian country; such type of setups usually work well with this large community. o Objective of not maximizing profit and upholding quality at every step in its value chain. o Atypical of traditional co-operatives; GCMMF has scaled heights in terms of developing a powerful brand among the masses ? Leadership of Dr. V. Kurien o Dr. Kurien has displayed an excellent vision for the farmers in India removing the inefficiencies that existed in milk procurement and revamped the entire supply chain. The exemplary leadership skills shown by Dr. Kurien speak volumes about GCMMF and its success. This is one of the most powerful tools that GCMMF possesses and this is what is needed going into the new millennium. ? An excellent distribution network across India which it can leverage for diversifying in other product lines o Extensive sales and distribution network and an excellent cold chain network. o Dealer network of 3600 dealers and 4 lakh retailers; this reach is difficult to match and GCMMF could leverage on this same strength. ? Organizational structure of GCMMF
o A lean organization has its advantages in terms of autonomy and less reporting conflicts among the employees. This was cost effective and clear cut demarcation responsibilities also bought accountability amongst its members. o Each executive was responsible for his line of products and the top management could easily oversee the happenings thereby evaluate whether the strategies followed are in line with the strategic intent of GCMMF. o Links with schools of excellence like IRMA; thereby having access to quality managerial talent. ? Competitive advantages difficult to match by other players in the same sector o Low costs due to disintermediation in the supply chain and low employee costs have kept the operational expenses to a minimal; this gives financial muscle in the form of cash thereby giving it an opportunity to grow both organically and inorganically. o Scale and scope of operations unmatched by any other player. ? Strong Brand equity in the form of Amul and associations of purity and quality that could be leveraged upon. ? A product line ranging from milk and milk based products that hold the top position in its category; hence it has the expertise of retaining its market share even in the light of heavy competition. ? Ability to enter an established product category (ice creams) and catapult to the number 2 brand in a single fiscal year. This speaks volumes about GCMMF’s capability to understand the consumer, competition and market. ? GCMMF’s management of change initiative o The focus of this initiative was TQM across various levels of the supply chain and also going backwards in terms of getting the source of your inputs exposed to the correct practices and processes. ? Media strategy of GCMMF o The ability to connect with the masses through an effective communication mix and by utilizing media taking into account various aspects of reach, recall and excellent positioning would help in diversifying into other range of products.
?
Governed by governmental regulations o It is assisted by the government in terms of subsidies and grants; hence it is accountable to the Indian public. o Has to sacrifice the profit motto by keeping prices within reach of the economically weaker section. o Registrar of co-operatives does have a say inhibiting growth at times. o Governmental policies and regulations are different for co-operatives; hence there are complaints of an absence of a level playing field.
Consumer: ? Milk being a very generic commodity; the end consumer doesn’t distinguish betweens as it is an essential commodity. Hence the consumer perspective towards a generic commodity is different from its derivatives (such as cheese and butter). ? Trend of the Indian consumer moving towards premium products. Here is where an opportunity exists in terms of selling processed food products ? Health conscious nature of the Indian consumer came to the fore with the success of the edible oil brand Dhara. ? The reason for the low milk consumption inspite of government involvement and ads portraying the benefits of milk consumption; the importance of consumer education does hold the key in certain products like milk. This is because milk consumption has reached a saturation point and GCMMF has no other option other than to spread awareness among the intended target segment. ? Receptive to marketing communication that connects with daily issues (Amul ads); GCMMF could leverage on the rapport with the consumer and the expertise on this type of a media strategy.
Competitor:
?
FMCG giants like HLL and Brittania have made their presence felt in competing product lines of GCMMF. HLL is known for its marketing prowess and an excellent distribution system; and having financial muscle can overpower GCMMF. The strategic stakes associated with HLL are very high for its parent Unilevers. HLL has mostly embarked on an acquisition strategy for product lines in which it feels holds tremendous potential. Going forward its can pose one of the strongest challenges to GCMMF in its endeavour to make it big in the processed food products. MNC’s like Nestle is in competition in certain categories but does lack a uniform presence across categories. The edible oils and packet liquid milk to a large extent still depends on local distributors. Competing in a fragmented market gives rise to a squeeze on profitability; but then it can leverage on its strength of having a powerful brand and a favourable association of purity and quality. In its endeavour to enter the fruits and vegetables business, its initial tryst with establishing the GCMMF success story can come handy. It has a powerful tool in having experience of dealing with grassroot farmers and these are the same people who would dictate the fruits and vegetables supply chain. The other product lines like sauces and ketchups do have MNC biggies like Nestle and Heinz.
?
?
?
?
?
GCMMF should be able to form a competitor response profile of each of its competitors based on the assumptions they hold about the nature of the business, their strengths and weaknesses and their current strategy. This would help GCMMF counter competition effectively. Alternatives: What are the options available in front of GCMMF going into the new millennium? ? If we have a look at the existing product line of GCMMF, we can see that the average growth rate of milk and milk based products has been in the range of 10-100% with the least being that of liquid milk and the highest being for ice creams. India’s average milk
consumption is way below the world average. Hence there exists tremendous potential in India itself. The thrust in India itself keeping in mind the rural-urban disparity. Can GCMMF employ Ansoff’s Matrix in the current situation that it finds itself in? MARKET
OLD NEW
P R O D U C T
OLD
Market Penetration
Market Development
NEW
Product Development
Diversification
Market Penetration This strategy implies that GCMMF continue with its existing product line and not to make additions. But concentrate on penetrating the market. As said earlier rural India still holds tremendous potential; but then the issue is selling them products that they normally consume and prepare at home. Alternatives Involved o Firstly one needs to communicate the benefits of milk and milk based products; this could be done through the elements of their communication mix. o Set up Amul hubs in rural hinterlands; hence when the farmer comes to collect his money for the milk supplied; GCMMF can cross-sell its range of products. o Ice-Cream holds tremendous potential in rural areas; especially candy but the issue then props of cold storage facilities but it can employ its cold storage
expertise for the same. Start with rural vans only selling ice-creams and roaming around countryside. This would also increase the awareness level of the GCMMF and its flagship brands and create tremendous brand equity. o Alliance with existing rural retailers, ex: collaboration models or one can scout for alliances with fellow agri-retailers (though we are talking of the year 2000 when it was still in a nascent stage). o Revitalize the Safal brand. This segment holds potential but there are issues relating to sourcing and intermediaries in terms of a higher markup.
Product Development o The urban market is moving towards a trend of being more health conscious; hence organic and probiotic range of products could be added to the existing product line. This would be incremental to the existing product line. The benefits of this would be higher margins and profitability and much needed capital for further expansions. Profitability would also mean benefits for its members.
Market Development o The Indian market is saturated and Amul has built its brand presence here. There exists tremendous opportunities for GCMMF to replicate its Anand pattern across other emerging agrarian countries. Even if GCMMF doesn’t have intention of setting up hubs; exports hold tremendous potential. o In many of the budgets and WTO meetings, dairy sector has given preference and these aspects could be leveraged upon. o Another way to access these markets would be to forge a JV or an alliance or acquire a firm with capabilities that would act as a engine to future growth. o The benefits from entering new markets would be reduction of risk of dependence on the home market; and also transfer of technological know how and there would be opportunities to continuously improve your firms’ processes.
Market development and diversification related with processed food sector (fruits & vegetables) o Replicate the Anand pattern in the processed food sector. ? This cane done because the strength of GCMMF is its ability to source products directly from the rural farmer. In the initial phase this can be done in the states which have a high production of fruits and vegetables. This can also be implemented with fruits such as mangoes, bananas and citrus fruits that actually have acceptance in the domestic and the world market. o There exists tremendous potential with farming opportunities in the form of contract farming. This would also help to sort issues direct at the source and also help and control the quality of the product. This is also beneficial to the farmer as he would get a larger share in the profits of his produce sold. o Invite a foreign partner who has an expertise in the processed food sector. The supply chain is very different for milk and this sector. But the advantages with GCMMF is its dealer, distribution knowledge and the knowledge of the local market that is unmatched by another player. This can also be thought of in terms of a separate subsidiary that the two partners hold stakes. o Can GCMMF take the lead in association with NDDB and the government in setting up of fruit and vegetable co-operatives? Implications of this strategy ? Huge investment costs in terms of start up funding but the government backing could be utilized. ? Convincing the farmer is the biggest hurdle; but the farmer could be brought into your fold by giving him the right price and conveying the benefits of better market access. ? The risk associated is high because there are many local and MNC players entering this sector; hence competition is what one has to watch out for and here is where issues of level playing field crops up. Decision criteria ? Market potential, that the new segment it is set to enter in should be evaluated on the parameters of
o Measurable, accessible, whether the new segment is receptive to action plans and mechanisms and last but not the least it should be profitable to serve. ? Trends of the consumers’ consumption pattern towards alternative and premium quality food and diary products. ? Costs of serving the market; the investments needed and the probable revenue streams that would be generated ? Competitor response and threat of entrants and players in this sector.
Conclusion We believe the fruit based additives and beverage sector would be one of the growth drivers and we believe Amul should be in this range of product lines. We believe these initiatives could be launched under the Safal brand and considering that the new millennium would bring about a change in retail dynamics and changing consumer preferences; we believe this is the growth engine for GCMMF going into the new millennium. But there would be implications and evaluation of all the alternatives thoroughly before it embarks on a particular strategy.
doc_519303596.doc
milk foundation GCMMF sells products under AMul brand and this document focues on rural marketing efforts considering comapny, cosumer, competitor analysis alongwith ANsoff matrix, market penetration, product, market development and diversification strategies.
Gujarat Co-operative Milk Marketing Federation
Table of Contents
Issues /Problems in the case:............................................................................................2 Market potential/market analysis:...................................................................................3 Company.........................................................................................................................5 Consumer:......................................................................................................................7 Competitor:.....................................................................................................................7 Alternatives:.......................................................................................................................8 Market Penetration.........................................................................................................9 Product Development ..................................................................................................10 Market Development ....................................................................................................10 Market development and diversification related with processed food sector (fruits & vegetables)...................................................................................................................11
Introduction GCMMF is a state level federation is the nodal agency concerned with the marketing of products produced by the different milk co-operative member societies of the state of Gujarat and for other states marketing their products under the Amul brand name. As years passed by Amul has grown into a brand that every Indian can associate themselves with in their everyday lives. From milk and milk based derivatives; edible oil under the ‘Dhara’ brand name, ice-creams and fruit based derivatives under the ‘Safal’ brand name GCMMF has grown into from an organization with annual revenues of Rs. 7.6 billion in 93-94 to Rs. 18.1 billion in 98-99.
Issues /Problems in the case: But what is the road going ahead in the new millennium?
GCMMF consists of a three tier co-operative set up organization set up initially with a development motive to streamline milk procurement and act as a nodal agency for marketing the various products produced by the district unions. The year 2000 has seen saturation in terms of milk consumption. Whether to stick to its core business of dairy products or diversify into other products such as processed foods (jams, sauces and fruit juices)? ? Co-operatives as a management setup going into the new millennium; can it stand up to competition. This issue has come up because they believe the co-operative system does not get a level playing field with the giant corporates. ? How to identify the growth drivers going into the new millennium with changing environmental and consumer preferences? ? Can the Anand pattern be replicated across other product lines which hold tremendous potential (For ex: processed food sector)? ? There still exists tremendous potential in milk and milk based products (India avj-225 gms, World-600 gms); how to modify the current strategy in achieving this objective ? In the year 2000 there is tremendous competition from MNC players in the food processed segment. Will GCMMF able to counter competition effectively?
?
Market potential/market analysis: ? The Indian milk consumption was 225 gms per day compared to 600 gms per day in developed countries. Hence there exists tremendous potential in India itself. The product portfolio of GCMMF comprises a large chunk of such products; hence its efforts could be focused on targeting the Indian consumers with these products. ? The rural-urban consumption disparity stands at 121 gms vs. 400 gms. Hence rural consumption holds tremendous potential. ? Out of GCMMF’s total income of Rs. 18 billion in 98-99; the share of processed fruits and vegetables is quite small. Considering that there still exists a very nascent supply
chain and this being the major focus area of MNC’s.; this product line holds tremendous potential for GCMMF going into the new millennium. ? NDDB has played a crucial role in the promotion of dairy activities instituted by the government of India. The management and knowledge of this governmental organization could be leveraged in other areas. ? Exports in milk and processed food products are on the rise; hence there exists brand equity for these products outside India. This augments well for players in this sector. ? Production has increased by 5.3 % for fruits and vegetables; this national growth rate is higher than some of GCMMF’s existing businesses; hence there exists a window of opportunity for the same. This is also compounded by the fact that the total demand for fruits and vegetables would grow to 169 million tonnes by 2010 and only 1.3% was processed commercially compared to 70-80% in other developed and developing countries. ? An improved per capita income and living standards; there is a general shift in the eating habits of Indian towards premium food. Hence GCMMF has an opportunity towards probiotic and health conscious products. ? India’s processed food market currently estimated at Rs. 20 billion and the absence of organized co-operatives in this sector does hold potential for GCMMF. ? The food processing industry is extremely fragmented and the absence of a power brand in this sector does hold potential for GCMMF in building this sector. ? A highly inefficient food logistics and distribution system o Production, storage and handling facilities are poor o 35% of fruit and vegetable production wasted due to the inefficient supply chain, hence resulting in potential loss of revenue. o The markup at every stage is high, commission ranging from 25-30% at every stage; hence this presents GCMMF an opportunity for disintermediation thereby bringing in efficiencies in the existing supply chain. Another important conclusion is that there exists an opportunity to make a profit. Analysis with the help of the 3 C’s:
Company ? Co-operative setup of GCMMF. o GCMMF was formed to be the marketing agency for marketing the products produced by the milk societies/district unions and registered as a co-operative society in 1973. Hence we need to understand that the ideology behind a cooperative setup is very different from a traditional corporate setup. Such organizations differ in terms of their goals and objectives. The main objective of such co-operative organizations is first benefits for its members and social equity amongst them. Such organizations are driven by these ideals and hence their functioning would be different from the traditional corporate setups. o A co-operative setup is the best connected to the grassroot farmer and they understand the benefits of being associated and India largely being an agrarian country; such type of setups usually work well with this large community. o Objective of not maximizing profit and upholding quality at every step in its value chain. o Atypical of traditional co-operatives; GCMMF has scaled heights in terms of developing a powerful brand among the masses ? Leadership of Dr. V. Kurien o Dr. Kurien has displayed an excellent vision for the farmers in India removing the inefficiencies that existed in milk procurement and revamped the entire supply chain. The exemplary leadership skills shown by Dr. Kurien speak volumes about GCMMF and its success. This is one of the most powerful tools that GCMMF possesses and this is what is needed going into the new millennium. ? An excellent distribution network across India which it can leverage for diversifying in other product lines o Extensive sales and distribution network and an excellent cold chain network. o Dealer network of 3600 dealers and 4 lakh retailers; this reach is difficult to match and GCMMF could leverage on this same strength. ? Organizational structure of GCMMF
o A lean organization has its advantages in terms of autonomy and less reporting conflicts among the employees. This was cost effective and clear cut demarcation responsibilities also bought accountability amongst its members. o Each executive was responsible for his line of products and the top management could easily oversee the happenings thereby evaluate whether the strategies followed are in line with the strategic intent of GCMMF. o Links with schools of excellence like IRMA; thereby having access to quality managerial talent. ? Competitive advantages difficult to match by other players in the same sector o Low costs due to disintermediation in the supply chain and low employee costs have kept the operational expenses to a minimal; this gives financial muscle in the form of cash thereby giving it an opportunity to grow both organically and inorganically. o Scale and scope of operations unmatched by any other player. ? Strong Brand equity in the form of Amul and associations of purity and quality that could be leveraged upon. ? A product line ranging from milk and milk based products that hold the top position in its category; hence it has the expertise of retaining its market share even in the light of heavy competition. ? Ability to enter an established product category (ice creams) and catapult to the number 2 brand in a single fiscal year. This speaks volumes about GCMMF’s capability to understand the consumer, competition and market. ? GCMMF’s management of change initiative o The focus of this initiative was TQM across various levels of the supply chain and also going backwards in terms of getting the source of your inputs exposed to the correct practices and processes. ? Media strategy of GCMMF o The ability to connect with the masses through an effective communication mix and by utilizing media taking into account various aspects of reach, recall and excellent positioning would help in diversifying into other range of products.
?
Governed by governmental regulations o It is assisted by the government in terms of subsidies and grants; hence it is accountable to the Indian public. o Has to sacrifice the profit motto by keeping prices within reach of the economically weaker section. o Registrar of co-operatives does have a say inhibiting growth at times. o Governmental policies and regulations are different for co-operatives; hence there are complaints of an absence of a level playing field.
Consumer: ? Milk being a very generic commodity; the end consumer doesn’t distinguish betweens as it is an essential commodity. Hence the consumer perspective towards a generic commodity is different from its derivatives (such as cheese and butter). ? Trend of the Indian consumer moving towards premium products. Here is where an opportunity exists in terms of selling processed food products ? Health conscious nature of the Indian consumer came to the fore with the success of the edible oil brand Dhara. ? The reason for the low milk consumption inspite of government involvement and ads portraying the benefits of milk consumption; the importance of consumer education does hold the key in certain products like milk. This is because milk consumption has reached a saturation point and GCMMF has no other option other than to spread awareness among the intended target segment. ? Receptive to marketing communication that connects with daily issues (Amul ads); GCMMF could leverage on the rapport with the consumer and the expertise on this type of a media strategy.
Competitor:
?
FMCG giants like HLL and Brittania have made their presence felt in competing product lines of GCMMF. HLL is known for its marketing prowess and an excellent distribution system; and having financial muscle can overpower GCMMF. The strategic stakes associated with HLL are very high for its parent Unilevers. HLL has mostly embarked on an acquisition strategy for product lines in which it feels holds tremendous potential. Going forward its can pose one of the strongest challenges to GCMMF in its endeavour to make it big in the processed food products. MNC’s like Nestle is in competition in certain categories but does lack a uniform presence across categories. The edible oils and packet liquid milk to a large extent still depends on local distributors. Competing in a fragmented market gives rise to a squeeze on profitability; but then it can leverage on its strength of having a powerful brand and a favourable association of purity and quality. In its endeavour to enter the fruits and vegetables business, its initial tryst with establishing the GCMMF success story can come handy. It has a powerful tool in having experience of dealing with grassroot farmers and these are the same people who would dictate the fruits and vegetables supply chain. The other product lines like sauces and ketchups do have MNC biggies like Nestle and Heinz.
?
?
?
?
?
GCMMF should be able to form a competitor response profile of each of its competitors based on the assumptions they hold about the nature of the business, their strengths and weaknesses and their current strategy. This would help GCMMF counter competition effectively. Alternatives: What are the options available in front of GCMMF going into the new millennium? ? If we have a look at the existing product line of GCMMF, we can see that the average growth rate of milk and milk based products has been in the range of 10-100% with the least being that of liquid milk and the highest being for ice creams. India’s average milk
consumption is way below the world average. Hence there exists tremendous potential in India itself. The thrust in India itself keeping in mind the rural-urban disparity. Can GCMMF employ Ansoff’s Matrix in the current situation that it finds itself in? MARKET
OLD NEW
P R O D U C T
OLD
Market Penetration
Market Development
NEW
Product Development
Diversification
Market Penetration This strategy implies that GCMMF continue with its existing product line and not to make additions. But concentrate on penetrating the market. As said earlier rural India still holds tremendous potential; but then the issue is selling them products that they normally consume and prepare at home. Alternatives Involved o Firstly one needs to communicate the benefits of milk and milk based products; this could be done through the elements of their communication mix. o Set up Amul hubs in rural hinterlands; hence when the farmer comes to collect his money for the milk supplied; GCMMF can cross-sell its range of products. o Ice-Cream holds tremendous potential in rural areas; especially candy but the issue then props of cold storage facilities but it can employ its cold storage
expertise for the same. Start with rural vans only selling ice-creams and roaming around countryside. This would also increase the awareness level of the GCMMF and its flagship brands and create tremendous brand equity. o Alliance with existing rural retailers, ex: collaboration models or one can scout for alliances with fellow agri-retailers (though we are talking of the year 2000 when it was still in a nascent stage). o Revitalize the Safal brand. This segment holds potential but there are issues relating to sourcing and intermediaries in terms of a higher markup.
Product Development o The urban market is moving towards a trend of being more health conscious; hence organic and probiotic range of products could be added to the existing product line. This would be incremental to the existing product line. The benefits of this would be higher margins and profitability and much needed capital for further expansions. Profitability would also mean benefits for its members.
Market Development o The Indian market is saturated and Amul has built its brand presence here. There exists tremendous opportunities for GCMMF to replicate its Anand pattern across other emerging agrarian countries. Even if GCMMF doesn’t have intention of setting up hubs; exports hold tremendous potential. o In many of the budgets and WTO meetings, dairy sector has given preference and these aspects could be leveraged upon. o Another way to access these markets would be to forge a JV or an alliance or acquire a firm with capabilities that would act as a engine to future growth. o The benefits from entering new markets would be reduction of risk of dependence on the home market; and also transfer of technological know how and there would be opportunities to continuously improve your firms’ processes.
Market development and diversification related with processed food sector (fruits & vegetables) o Replicate the Anand pattern in the processed food sector. ? This cane done because the strength of GCMMF is its ability to source products directly from the rural farmer. In the initial phase this can be done in the states which have a high production of fruits and vegetables. This can also be implemented with fruits such as mangoes, bananas and citrus fruits that actually have acceptance in the domestic and the world market. o There exists tremendous potential with farming opportunities in the form of contract farming. This would also help to sort issues direct at the source and also help and control the quality of the product. This is also beneficial to the farmer as he would get a larger share in the profits of his produce sold. o Invite a foreign partner who has an expertise in the processed food sector. The supply chain is very different for milk and this sector. But the advantages with GCMMF is its dealer, distribution knowledge and the knowledge of the local market that is unmatched by another player. This can also be thought of in terms of a separate subsidiary that the two partners hold stakes. o Can GCMMF take the lead in association with NDDB and the government in setting up of fruit and vegetable co-operatives? Implications of this strategy ? Huge investment costs in terms of start up funding but the government backing could be utilized. ? Convincing the farmer is the biggest hurdle; but the farmer could be brought into your fold by giving him the right price and conveying the benefits of better market access. ? The risk associated is high because there are many local and MNC players entering this sector; hence competition is what one has to watch out for and here is where issues of level playing field crops up. Decision criteria ? Market potential, that the new segment it is set to enter in should be evaluated on the parameters of
o Measurable, accessible, whether the new segment is receptive to action plans and mechanisms and last but not the least it should be profitable to serve. ? Trends of the consumers’ consumption pattern towards alternative and premium quality food and diary products. ? Costs of serving the market; the investments needed and the probable revenue streams that would be generated ? Competitor response and threat of entrants and players in this sector.
Conclusion We believe the fruit based additives and beverage sector would be one of the growth drivers and we believe Amul should be in this range of product lines. We believe these initiatives could be launched under the Safal brand and considering that the new millennium would bring about a change in retail dynamics and changing consumer preferences; we believe this is the growth engine for GCMMF going into the new millennium. But there would be implications and evaluation of all the alternatives thoroughly before it embarks on a particular strategy.
doc_519303596.doc