Amul is an Indian dairy cooperative based in Anand, Gujarat that was formed in 1946. In 2001, Amul launched vegetable pizzas under the brand SnowCap priced between Rs. 20-25 to enter the fast food market, much lower than competitors' prices of Rs. 39 or more. Amul also planned to open 3,000 pizza franchise outlets by 2005. Amul diversified its product portfolio with products like ice cream, curd and paneer to take advantage of changing lifestyles in India and increase consumption of milk-based products. The diversification helped Amul broaden its appeal and increase earnings for its 2.8 million milk producer members.

1. Topic:- Amul's Diversification Strategy: A Pizza for Rs 20!
Introduction about Amul:
INTRODUCTION
Amul (ANAND MILK UNION LIMITED)
Type Cooperative
Industry Dairy
Founded 1946
Headquarters Anand, India
Revenue INR 67.11 billion
Employees 735 employees of Marketing Arm.
2.8 million milk producers
Amul formed in 1946, is a dairy cooperative in India. It is a brand name managed by an apex
cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which
today is jointly owned by some 2.8 million milk producers in Gujarat, India[2].
AMUL is based in Anand, Gujarat and has been an example of a co-operative organization's success
in the long term. It is one of the best examples of co-operative achievement in the developing
economy[citation needed]. "Anyone who has seen … the dairy cooperatives in the state of Gujarat, especially
the highly successful one known as AMUL, will naturally wonder what combination of influences
and incentives is needed to multiply such a model a thousand times over in developing regions
everywhere."[3] The Amul Pattern has established itself as a uniquely appropriate model for rural
development. Amul has spurred the White Revolution of India, which has made India the largest
producer of milk and milk products in the world.
In early 2001, Gujarat Cooperative Milk Marketing Federation (GCMMF)1 planned to
leverage
its brand equity and distribution network to turn Amul2 into India's biggest food brand.
Verghese Kurien, Chairman of GCMMF, set a sales target of Rs.10 bn by 2006 as against
sales
of Rs 2.3 bn in 2001. In 2001, GCMMF entered the fast food market in India with the launch
of
vegetable pizzas under the brand name SnowCap in Ahmedabad, Gujarat. GCMMF was also
planning to launch its pizzas in other western Indian cities like Mumbai, Surat, and Baroda.
Functionoig :
At village level:--- Collection of surplus milk from the milk producers of the village & payment based
on quality & quantity Providing support services to the members like Veterinary First Aid, Artificial
Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales,
conducting training on Animal Husbandry & Dairying, etc. Selling liquid milk for local consumers of
the village Supplying milk to the District Milk Union
At district level:---
Providing management support to the VDCS along with regular supervision of its activities. Establish
Chilling Centres & Dairy Plants for processing the milk received from the villages. Selling liquid milk &

2. milk products within the District Process milk into various milk & milk products as per the
requirement of State Marketing Federation. Decide on the prices of milk to be paid to milk
producers as well on the prices of support services provided to members.
At state level:---
Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution
network for marketing of milk & milk products. Arranging transportation of milk & milk products
from the Milk Unions to the market. Creating & maintaining a brand for marketing of milk & milk
products (brand building). Providing support services to the Milk Unions & members like Technical
Inputs, management support & advisory services. Pooling surplus milk from the Milk Unions and
supplying it to deficit Milk Unions.
PIZZA FOR 20 BUGS
In 2001, GCMMF entered the fast food market in India with the launch of vegetable pizzas under the
brand name SnowCap in Ahmedabad, Gujarat. GCMMF was also planning to launch its pizzas in
other western Indian cities like Mumbai, Surat, and Baroda. The existing players in the pizza market,
like Domino's, Pizza Hut and Nirula's offered pizzas at nothing less than Rs.39 and GCMMF launched
the pizzas in the Rs.20-25 price range. GCMMF planned to open 3,000 pizza retail franchise outlets
all over the country by 2005. The main cost component of the pizza is the mozzarella cheese. And
compared to the market price of Rs 146 per kg GCMMF offered the cheese at a bulk rate of Rs.140
per kg,
BACKGROUND
GCMMF, commissioned the Indian Market Research Bureau (IMRB) to conduct a consumer survey to
identify the products consumers wanted from Amul. Based on the findings, Amul entered into the
following areas like ice cream, curd, paneer, cheese, and condensed milk. In 1997, Amul launched Ice
cream which was one of the few milk-based ice creams in the market. In January 2000, Amul re-
entered the carton milk market with the launch of "Amul Taaza" in Mumbai. In July 2001, Amul
planned to enter the instant coffee market through a tie-up with Tata Coffee.
WHY DIVERSIFICATION TOOK PLACE
With the liberalization of the Indian economy in the early 1990s, and the subsequent entry of new
players, there was a change in lifestyles and the food tastes of people. The new team that took over
the management of the GCMMF in the mid-1990s hoped to take advantage of the change . They also
diversified the Amul portfolio, offering a range of food stuffs such as ketchup, jam, ice-cream,
confectionaries, cheese, and shrikhand.
DIVERSIFICATION- NOT DEMAND DRIVEN

3. Being a cooperative, GCMMF was compelled to buy all the milk that was produced in Gujarat . And
with milk production having increased since the mid 1990s, GCMMF had to make use of additional
milk, And hence the pressure to make and market more and more processed-milk products. Amul
had to expand the consumption base of milk-based products in India and it planned to make its
products (butter and cheese) a part of the regular diet in most households Price was an advantage
that Amul enjoyed over its competitors. Amul's products were priced 20-40 % less than those of its
Competitors Amul launched its new products with the intention of increasing the offtake of its basic
milk products, including cheese. This in turn was expected to increase the earnings of the
farmers.The entry into the confectioneries market was another avenue for increasing milk
consumption. This flurry of launches helped Amul broaden its appeal across
all segments.