India's Amul: Keeping Up with the Times

Amul is an Indian dairy cooperative founded in 1947—eight months before India's independence from British rule—and owned by over three million farmers in the state of Gujarat. It is India's largest food product marketing organization, selling 46 products, including pouched milk, cheese, butter, ice cream, and infant food through a million retailers across the country, and is the market leader in almost all the categories in which it operates. Amul is well known among Indian consumers for offering high-quality products at reasonable prices, and runs a highly popular advertising campaign that spoofs current events. It offers its farmers 80% of the consumer's dollar for milk, compared with 35%–40% typical in some Western markets. Amul's cooperative dairy model has been replicated across several Indian states, thereby helping increase the incomes of 80–100 million farmer families across the country. However, despite its success, Amul is beginning to come under increasing pressure. Multinationals like Nestlé and Unilever are increasing their presence in India and competing fiercely with Amul in value-added products like yogurt. The entry of large multi-brand retailers like Walmart and Carrefour in the Indian market threatens to squeeze Amul's margins and undermine its low-cost distribution network. India's large young rural population is shying away from dairy farming in favor of urban jobs, leaving questions about future procurement. Finally, Amul's farmers form a large vote bank in the state of Gujarat, and its cooperative structure risks being compromised by vested political interests. Should Amul continue with the business model that has served it so well for decades, or should it change its strategy in order to keep up with India's changing social, political, and economic landscape?