Amul is an Indian dairy cooperative founded in 1947, eight months before
India's independence from British rule, and owned by over three million
farmers in the state of Gujarat. It is India's largest food product
marketing organization, selling 46 products, including pouched milk,
cheese, butter, ice cream and infant food through a million retailers
across the country, and is the market leader in almost all the
categories that it operates in. Amul is well known among Indian
consumers for offering high-quality products at reasonable prices, and
runs a highly popular advertising campaign that spoofs current events.
It offers its farmers 80% of the consumer's dollar for milk, compared
with 35%-40% typical in some Western markets. Amul's cooperative dairy
model has been replicated across several Indian states, thereby helping
increase the incomes of 80-100 million farmer families across the
country. However, despite its success, Amul is beginning to come under
increasing pressure. Multinationals like Nestlé and Unilever are
increasing their presence in India, and competing fiercely with Amul in
value-added products like yogurt. The entry of large multi-brand
retailers like Walmart and Carrefour in the Indian market threatens to
squeeze Amul's margins and undermine its low-cost distribution network.
India's large young rural population is shying away from dairy farming
in favor of urban jobs, leaving questions about future procurement.
Finally, Amul's farmers form a large vote bank in the state of Gujarat,
and its cooperative structure risks being compromised by vested
political interests. Should Amul continue with the business model that
has served it so well for decades, or should it change its strategy in
order to keep up with India's changing social, political and economic
landscape?