India is the the world’s largest market, but extremely complex as well. For any foreign company to establish itself here it would need deep pockets, a good brand name and robust infrastructure, stated RS Sodhi Managing Director of Gujarat Cooperative Milk Marketing Federation (AMUL). He said this at a webinar organised by The Free Press Journal in association with IIM Indore.
During the webinar series titled 'India after COVID-19', Sodhi said, " The world’s largest and fastest-growing market is India. Most of the large markets are either saturated or de-growing." This is why India is an attractive market for foreign companies. But due to the complex nature of the Indian market, many foreign companies entered and exited the market in the past, as they were unable to understand the India model, he asserted. This is mainly because every state in India is diverse making it a challenge for companies to become a national player.
He asserted that for any food and dairy company, it will be a humongous task to become a market leader. "To become a leader in dairy, you need huge infrastructure in milk procurement and that will take decades. Even if the company comes with deep pockets, has a very good brand and has robust infrastructure, it will still take a minimum three to four decades to reach to Amul's level, " Sodhi informed.
In India, milk production is growing at the rate of 5 per cent. Meanwhile, the organised sector is growing at a rate of 9-10 per cent. Sodhi strongly feels that the organised sector will grow further, post Coronavirus. "Due to the crisis, farmers and customers have realised that they can rely on the organised sector compared to the unorganised sector."
Comparing the cooperative with the corporate sector, Sodhi stated all cooperatives across India purchased 30-50 per cent more milk from farmers, during this lockdown period. This procurement didn't impact milk prices at all. Meanwhile, Amul has seen a 15 per cent increase in procurement during this time.
Amul is procuring milk from over 36 lakh farmers twice every day and transports them using 5, 000 milk tankers. "At any given time, there are 50,000 supply chain partners on the road ensuring that milk reaches consumers. There is no holiday where milk supply is concerned, " informed Sodhi.
Narrating the challenges during the lockdown, Sodhi said in the initial phases there was panic buying. "Sales increased for the first three-four days of the lockdown and on the fourth-day fresh milk sales declined by 30 per cent." However, now the consumption of dairy and value-added dairy products has increased by 20-50 per cent. "This phenomenon is not limited to India alone but the increase in consumption is seen across the world. No one expected this rise, " he added.
For the last ten years, Amul has been growing at a CAGR of 17-18 per cent and it hopes to grow further.
This is the third webinar organised by The Free Press Journal in association with IIM Indore. While Big FM was the media partner for the event, Moneylife was the outreach partner.