But Amul’s owners say the boardroom battle won’t affect business as the brand is managed by professional managers.
This is one controversy the Amul girl can’t make fun of. For, it is about the company and the brand she has been endorsing for over 30 years.
For the second time in four years, Gujarat Co-operative Milk Federation (GCMMF), which owns Amul, is facing a power struggle at the top (See box). And the battle gets murkier by the day.
Will the uncertainty affect the brand and the fortunes of over 3 million farmers who depend on it for their livelihood? With a network of 13 district cooperative milk producing unions in 12,000 villages of Gujarat, GCMMF has a daily average milk collection of 8.7 million litres.
GCMMF says all is well and reels out data to prove the point. According to a senior executive, Amul has in fact sold 20 per cent more in May as compared to the corresponding period last year. Sales have gone up 10 per cent in the second week of June when B M Vyas, the Managing Director, resigned in a huff, compared to the first week of the month.
Brushing aside all talks of Amul’s image being affected, the man at the centre of it all – GCMMF Chairman Parthi Bhatol — says “The quality of our products is maintained by professionals who are not a part of this controversy. This can be gauged from the fact that our sales are expected to be 22 per cent higher this year as against the previous year. “We should not mix politics with business,” he says.
Some brand experts agree and say the board room controversy will not have any impact on the image of Amul, a brand which has 20 per cent share in the organised liquid milk market in India.
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“Brand Amul is unlikely to be affected by the crisis that has gripped the co-operative federation,” says Atul Tondon, a management consultant and former director at Mudra Institute of Communication, Ahmedabad (MICA).
Last year in June, Amul was ranked as the number one dairy product in the Asia Pacific region in a consumer survey carried out by Media Magazine published from Hong Kong and Singapore. The survey placed Amul ahead of Kraft, Dutch Lady, Dumex, Walls, Anchor, Magnolia, Everyday and several other leading brands in Asia Pacific.
Besides, GCMMF sources say such a controversy is not new for Amul, which is run on a co-operative basis. In 2006, a similar crisis had emerged when Verghese Kurien was forced to quit GCMMF.
“Even at that time, there was no impact on Amul’s image in the market. In fact, the turnover of the federation continued to rise, which has soared to over Rs 8,000 crore now,” the sources say.
But not everyone is convinced. Brand experts say Amul can hardly afford to have such boardroom fracas at a time when a host of big names such as Nestle, Britannia and Danone. and a clutch of domestic players are giving stiff competition. In its home turf too, Amul is facing tough fight from ice-cream majors such as Vadilal and Havmor that are expanding footprint and growing at more than 30 per cent a year.
Also, a new battle in the ongoing power struggle appears to be holding the ownership of Amul at stake. Amul’s trademark is owned by Kheda District Co-operative Milk Producers Union Ltd, popularly known as Amul Dairy. The chairman of Amul Dairy and Congress leader, Ramsinh Parmar, has threatened that the dairy will pull back Amul’s trademark and not allow some district dairy unions to market their products under this brand. GCMMF has been marketing and distributing its products under two brands — Amul and Sagar — since its inception in 1973.
Many insiders also say that the controversy this time may affect the brand. The unceremonious exit of Vyas is likely to affect the company as it was under him that Amul scaled greater heights.
While Kurien made Amul popular for its butter and cheese, it was during Vyas’ tenure that the company gained ground in ice-creams, curd, shrikhand and other milk products. “Vyas, who was close to Kurien, has handled about 138 products and has been a visionary leader,” sources close to the development say.
Amul must be hoping desperately for some magic from its brand mascot before the Taste of India, the brand’s famous tagline, becomes too bitter.