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Unlocking in the Lockdown: Amul`s Surge during Testing Times

Case Code: MKTG423
Case Length: 12 Pages
Period: 2019-20
Pub Date: 2020
Teaching Note: Available
Price: Rs.300
Organization : Gujarat Co-operative Milk Marketing Federation Limited ( Amul)
Industry :Food & Beverage
Countries : India
Themes: Marketing Strategy/ Direct to Consumer/ Advertising & Promotion/Crisis Management
Global Economic Impact of Coronavirus – Assessment and Mitigation (B)
Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Navigating the Lockdown

When the government of India announced the nationwide lockdown with effect from March 25, 2020, to contain the spread of the coronavirus, Amul converted the pandemic crisis into an opportunity. The dairy industry was allowed to operate during the pandemic since milk came under the essential food category. Amul had the experience of operating in situations like curfews and natural calamities in Gujarat. “We are used to working in curfews during riots and natural disasters, especially in Gujarat. Just the scale of it was nationwide this time,” Sodhi said. Given its ground experience of operating in difficult situations, the milk giant assured people that it would make dairy products available during the lockdown. Amul took all possible steps to enable smooth business operations during the pandemic, giving millions of Indians, even in the remotest of regions, access to its products...

Consumer Behavior

Despite the fall in demand for milk and related products from the hospitality and commercial segments, increasing household consumption helped Amul make up for the lost demand. It procured around 26 million liters of milk daily in normal times and this increased by 15% during the lockdown, mainly because milk collection in the private sector including the restaurants, hotels, small dairies, vendors, and ice cream manufacturers had completely come to a standstill...

Uninterrupted Supply Chain

Unlike the supply chains of other business units that started from a factory or an ancillary supplier, Amul’s supply chain was multi-layered and multi-dimensional, starting from the source of milk production (the cattle and the milk suppliers). Given the changing dynamics of supply – increasing demand for dairy products and reduced demand for frozen products – Amul faced logistic and supply chain issues for delivery of milk products. Particularly during the early part of the lockdown, it was unable to deliver its products to distributors and retail outlets...

Incentives and Safety Measures

Amul not only procured more milk during the lockdown, but it also increased incentives through the supply chain. It incentivized supply chain partners like labor, transporters, and employees in order to encourage them to work and cooperate during the supply chain disruption. Soon after the lockdown,..

Media Promotion

After the lockdown was announced, Amul started dominating the television media in advertising, taking the maximum target rating points (TRPs) as the low advertising by other brands worked strategically in its favor, N Chandramouli (Chandramouli), CEO, TRA Research , said. Amul believed advertisements on television would help it reach the maximum number of people as television was the most widely used as a source of entertainment all across the country...

Online Sales

Amul adopted the approach of using a third-party online sales platform to increase online sales, bypassing physical retailers. The lockdown accelerated the milk cooperative’s e-commerce sales by two, three, or even four times, depending upon the cities. Amul used third-party e-commerce players in India (online grocery portals) such as BigBasket, Dunzo, Flipkart, and Milkbasket to expand its online sales during the pandemic...

Road Ahead

India’s credit rating agency CRISIL estimated that the Indian dairy sector would see a flat revenue growth during 2020-21, as against a 10% compound annual growth rate (CAGR) over the past decade due to the fall in the sale of value-added products. With the closure of hotels and restaurants and fall in the consumption of products including ice-cream, the demand for value-added products was expected to de-grow 2-3% in the fiscal year 2020-21, reducing operating profitability by as much as 50-75 basis points (bps), CRISIL said...

Exhibits

Exhibit I: Sales Turnover of GCMMF (From 1994-95 to 2019-20)

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