Stock Analysis

The Pandemic Success Story of Amul

COVID-19 has been making the headlines for over a year now. The year 2020 was really challenging for everyone but people who embrace challenges are the ones who emerge as winners. Today we are going to discuss another such company that teaches us to take calculated risks to turn a crisis into an opportunity. It is none other than Anand Milk Union Limited also known as AMUL.

After the announcement of nationwide lockdown on 24th March 2020, several businesses were shut down for months. The Indian economy suffered a 10 lakh crore revenue loss in the last year. There were a few businesses that were operating as they came under the essentials category, one of them being the Dairy Industry. When the entire dairy industry was cutting down its production and was suffering a loss of 112.3 crores daily, AMUL managed to increase its revenue by 698 crores. This was one of the biggest milestones AMUL achieved in the lockdown.

Source – Zee News

You might be curious about how they were able to do it when restaurants, hotels were all shut down which contributes up to 20% of its revenue? The answer is very simple – Understanding and forecasting the consumer needs. Several marketers have said that after every major crisis, consumer behaviour is bound to change. All over India, people couldn’t order food from restaurants so they started cooking the food themselves. 

The lockdown food trend included delicacies like Dalgona coffee, mug cakes, and pizzas and guess what is common among all these foods. You guessed it right, “Milk and Milk’s byproducts”. Amul was operating at 100% capacity and thus, were able to meet the sudden increase in demand for dairy products. Several consumers started buying packaged milk rather than loose milk as a preventive measure against COVID-19. This led to an increase in sales of condensed milk by 100%, cheese by 80%, and cottage cheese by 40%. 

With this increase in their sales, they not only dominated the market with their existing products but also launched 33 new products in the market. To fulfil the demands of the consumers, AMUL started collecting an additional 35 lakh litres of milk every day.

Due to the increase in revenue, AMUL was able to provide an extra 800 crores of incentives to its rural milk producers. When they noticed that the cattle didn’t have enough fodder, they also provided milk producers with good quality fodder. They also made food and stay arrangements so that the frontline workers don’t get sick and get affected by COVID-19.

Source – Amul

The biggest question that arises after seeing the success of Amul would be how were they able to manage their resources so well?

Well, it was a smart decision of Dr Rupinder Singh Sodhi, the managing director of AMUL to partner with IBM by investing 80 crores for creating a digital system to track the entire operations. Due to this digital blueprint of Amul’s supply chain, the management was able to identify that their ice-cream and frozen food division was idle. Since they were able to identify the unutilised resources early on, they shifted their resources to other divisions helping Amul operate at 115% capacity.

Along with deciding how to utilise these resources to the fullest capacity, AMUL also came up with an alternative plan for the distribution of products. Due to strict lockdown restrictions and shortage of labour, transporting goods only via trucks would be a huge problem for them. They decided on transporting products to far off cities through railways. This step helped them connect more than 200 cities across India and tapping into new market sectors. The smooth supply chain of AMUL is also one of the biggest reasons behind its success.

While other dairy companies were cutting down on their costs like advertising, AMUL increased its advertisements by 316% as compared to 2019. Their Amul Kool ads were seen 10 times more than the Indian Premium League. They did not stop there. To stay relevant and trending, they started showing their old ads when Doordarshan started playing shows like Ramayan, Mahabharat etc. to maintain the nostalgia brought by the shows.

Source – Amul

Amul collaborated with 3rd party distributors like BigBasket, Flipkart, Dunzo and landed exclusive deals with Zomato and Swiggy for distributing its products across India. They sold milk products like butter, milkshake, paneer through these distributors. They were able to sell more than 60,000 products through Zomato in May 2020.

Through excellent foresight of consumer behaviour, agile supply chain system by digitising the entire operations, third party collaborations, incentivising labourers and strategic marketing campaigns AMUL was able to set a standard in the industry for crisis management.

Written by- Debanshi Shailja

Edited by- Yashasvi Kanodia

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