‘We don’t need any celebrity; celebrity endorsement has a credibility issue’

Gujarat Co-operative Milk Marketing Federation Ltd, which markets the popular Amul brand of milk and dairy products, has seen its annual turnover multiply 3.5 times in the past seven years. The country’s largest dairying entity plans to nearly double this in another three years, to ~50,000 crore. R S SODHI, managing director for a little over six years (and with the brand since 1982) talks to Sohini Das on current issues and what’s ahead. Edited excerpts:

The Bombay High Court will hear the matter on the Amul ice cream advertisement (objected to by multinational competitors for saying it’s a purely natural product, as opposed to the latter’s ‘frozen desserts’) on April 5. It will be almost a month of the ad on television and print. Do you plan to discontinue the ad, whatever the verdict, or come up with new ads on the same theme?

We are continuing with our campaign, both in print and on television, differentiating between frozen desserts and ice creams. By April 5 (Wednesday), it will already be four weeks of the campaign; we usually run these for that much time.

So, our purpose is served; such campaigns cannot work for longer periods. We have been running campaigns on frozen desserts versus icecreams for the past seven-eight years. It was not there earlier on television. We run for a few weeks, then take a break and, then, again when the next season starts. This time we did it on TV as we wanted to reach a wider audience. It caught on well on digital and print as well; this controversy also got us some free publicity. When the competition gets rattled with something, it means that is working well.

In this case, the campaign is icecream versus frozen dessert. In others, there is ‘Taste of India’ or ‘Amul doodh peeta hai India’. The theme remains the same and we have different ads or stories. Here, we are using a father-daughter story; tomorrow, there might be another story to convey the same message of difference between ice-creams and frozen desserts to consumers.

You spend less than one per cent of your turnover on advertising; you never rope in celebrities. What works as the USP of Brand Amul?

I think the blind faith that consumers have in our celebrity, the Amul Butter Girl. The Amul brand is itself a celebrity. We have never cheated consumers, never given inferior products, with synthetic or cheaper ingredients. People buy our products with blind faith. We don’t need a celebrity. Also, celebrity endorsement has an issue of credibility — do the celebs themselves use what they sell? At the end of the day, people don’t believe in celebrity endorsements.

You have always chosen a ‘health’ narrative to position your products, be it ice-creams, buttermilk, energy drinks, etc. Does this work on the impulse category of food items?

We have differentiators. Like, in ice creams, we use fresh cream and that is why we say ‘Real milk, Real ice cream’. I don’t think you can come out with a differentiator in butter or ice-cream when you have (only a ) good recipe; the thing is positioning. Like, our positioning in butter is ‘Utterly Butterly Delicious’; in milk, it’s ‘Amul doodh peeta hai India’ (Country drinks our milk). It is working well. That is why we don’t feel we have to change our positioning. Last year, we changed the positioning in our beverages — in our Masti buttermilk, we said ‘Desi Refresher’; in lassi, we started ‘Hamara Drink’; in the case of Amul Cool, we said ‘Drink Cool, Stay Cool’. In the case of any food, health comes after taste. First, it has to be tasty. Then healthy, refreshing or natural, whatever. If it’s not tasty, consumers will not buy again. You have to see how to make a tasty product healthy; it does not work the other way, making a healthy product tasty.

The ice cream space in India is getting increasingly crowded, with regional players gaining foothold and also eyeing national expansion. As the market leader, what is your strategy to beat the competition?

Amul is the only ice-cream brand with a pan-India presence — Kashmir to Kanyakumari, Jaisalmer to Shillong. The Amul brand is marketed in metro cities and in the tierII and tier-III cities. Our competitors do not market everywhere. Some choose to do so in only the premium cities. Ice-cream does not become premium by only marketing in premium cities; it becomes premium by its ingredients. Someone who is using cheap palmoline oil and market their products as premium — how can that work? That is what we want to tell our consumers, that you are paying for a premium product and you are getting some of the cheapest ingredients. The cost of production of frozen desserts is 40 per cent less compared to icecreams but they sell at the same rate. Maybe the company gives more margin to the retailer or the distributor. That is why we want to highlight the ingredient part.

Second, you are right that the ice cream space is getting increasingly crowded. In this case, you have to see that your reach is more than the regional players. The latter have more penetration in their respective zones. In our case, we have to be present not only in the metros but also the smaller towns. One has to have lower price-point products, and also invest in national brand building, something regional players cannot afford.

Also, one has to come up with exclusive products, especially those that use high-end technology, the kind not available with regional players. We are growing at 14-15 per cent (annually) in ice creams. The industry is growing at 12-14 per cent.

While many corporates have entered into value added dairy products, Amul’s DNA requires that it stays true to its liquid milk portfolio, a low margin product. As India’s largest dairy, how do you see the advent of corporatisation of dairying and the rise of value added products?

It is the biggest myth that value addition or a higher MRP (maximum retail price) implies higher realisation. The cost of production is equally high. Plus, from factory to consumer, it attracts at least 12-15 per cent tax, excise, etc. On fresh milk sales, there is no tax.

Value-added products are good only when it is good for the manufacturer as well. In liquid milk, the margins are around five per cent; in ice creams, 25-28 per cent. But, the volumes are much higher in liquid milk. At present, 50 per cent of our revenues come from liquid milk sales and the rest from value added products. You cannot make money in dairying if you do not make milk. Since we make milk, we have the byproducts, whether it is cream, etc, readily available. For someone who has to buy it, the economics won’t work. Second, the key in dairying is the link between the rural production centre and the nearest consumption centre. Milk is just like an agricultural crop. You have to sow it, nurture it, fertilise it and then harvest it. In the case of an agri crop, this process takes three to six months. In the case of milk, it takes two to three years.