Mother Dairy to cut prices in butter war with Amul

The Gujarat Co-orperative Milk Marketing Federation may not like an intrusion on its home territory, especially, when the opponent happens to be its rival, National Dairy Development Board (NDDB).

The Delhi-based Mother Dairy Foods Processing Ltd (MDFPL), a subsidiary of NDDB, launched its Mother Dairy brand butter in Mumbai recently to take GCMMF's Amul butter head-on. MDFPL has also decided to strategically price its butter lower than Amul butter in Kolkata and the rest of Maharashtra.

Interestingly, Amul, enjoys around 86 percent share of the Mumbai butter market, keeping its rivals Britannia and Nestle in the periphery.

However, with MDFPL entering into the price-sensitive Mumbai market with lower-priced butter, industry sources believe that it may lead to a price war between the two Boards.

While Amul has been selling its butter at Rs 72 for a 500 gram packet and Rs 15 for a 100 gms packet, in a strategic move Mother Dairy has launched its butter in Mumbai market at Rs 70 for 500 gms and Rs 14 for 100 gms.

It also has plans to source butter from Maharashtra to cater to the country's second largest market for table butter, Mumbai.

MDFPL is looking to capture at least 10 per cent of the butter market in Mumbai by the end of the current financial year.

"We will launch Mother Dairy Butter in rest of the Maharashtra too. We are also planning to launch butter in Kolakata, Paul Thachil, chief executive officer (CEO), MDFPL told Business Standard.

Saying that MDFPL would not be able to even make a 'dent' in Amul's butter market in Mumbai and entire country, G S Sodhi, chief general manager of GCMMF, said, "Amul butter holds around 86-87 per cent share of the huge butter market in Mumbai. Amul does not have any plan to reduce its prices for Mumbai or any other market as we believe in universal pricing across the country. While we have excellent cold chain arrangement, the new rival does not have any such arrangement, which is most necessary for marketing of milk products."

However, Thachil, Sodhi's business rival from MDFPL, said, "At present, Mother Dairy sources butter from its centralized plants at Jaipur in Rajasthan and Pilkhuwa in Uttar Pradesh. The company may move its production base to Maharashtra once the volumes for butter pick up in Mumbai."

It may be noted here that Mother Dairy has also launched its pouched milk in the Mumbai market, which is dominated by Amul. Amul had earlier launched pouched milk in northern India, considered to be the bastion of Mother Dairy and used used a similar strategy to beat Mother Dairy.

Consumers may be emerge as the ultimate beneficiaries of this war between the two boards.

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'Mother' of all competition

• Mother Dairy has launched its butter in Mumbai market at Rs 70 for 500 gms and Rs 14 for 100 gms. Amul has been selling its butter at Rs 72 for a 500 gram packet and Rs 15 for a 100 gms packet
• Amul currently has 86 per cent of the market share in the state. Mother Dairy is eyeing 10 per cent of the butter market in its initial stages