Why should the Amul moppet be scared of a little calf called Gowardhan?

Because the little brand now has Amul's erstwhile CEO on its side
Dibeyendu Ganguly

Everybody seemed to desert BM Vyas once he put in his resignation as managing director of the Gujarat Cooperative Milk Marketing Federation (GCMMF), owner of the Amul brand. Chairman Parthi Bhatol, with whom Vyas had been at loggerheads for years, accepted the resignation right away. Then the other Board members, all chairmen of Gujarats various district milk co-operatives, failed to weigh in on his side, as Vyas had hoped. Even Verghese Kurien, the 90 year old doyen of Indias dairy industry, who Vyas went to see, could do nothing to help his one time protg. In the end, the former MD would find his office sealed when he arrived to collect his things, leading him to kick the door in frustration, shattering a glass panel. An inglorious exit for a man who had spent 40 years with the organisation, 17 of which were as managing director. The Amul moppet was surely accumulating some bad karma. Nine months later, Vyas is back in a new avatar, as a director of Parag Milk Foods, owner of the Gowardhan and Go brands. At 750 crore, the company is less than one-fourth the size of Amul, but its a rising star. Is Vyas preparing the young David to fell the Amul Goliath? Organizations are not felled by their competitors. They are destroyed by their internal problems, he says ominously. Gowardhan is, in many ways, very similar to Amul, which is probably why Vyas is so comfortable there. Both organisations are firmly rooted in the villages and their biggest strength is their system for procuring milk from the rural hinterlands. While Amul is headquartered in Anand, near Vadodara, Gowardhan is located in the little town of Manchar, near Pune. Both offer up the full range of dairy products, from liquid milk, butter and ghee to curd and cheese. The notable difference is that Gowardhan milk comes from cows and Amuls, mostly from buffalos. And, of course, Amul is a cooperative while Gowardhan is owned by a Gujarati Jain family that has been engaged in the cattle-feed business in Maharshtras cow belt for generations. Gowardhans chairman Devendra Shah is the one who moved the family into the dairy industry when it was liberalised in the early-90s. Now hes pulled off quite a coup by roping in one of the industrys top professionals into what has hitherto been a family-run organisation. How did he do it? I didnt know Mr Vyas earlier, but I saw an opportunity when I heard he was leaving Amul. I met him in Mumbai and we got along very well. He said yes to my proposal right away, says Shah. Amul has built a reputation for being a rough competitor especially under Vyass reign and Gowardhan has received its share of grief from the giants hands. Shah shakes his head in some distress at the memory of the many marketing wars hes waged with Amul, but doesnt want to get into the details. Instead, he looks forward to what Vyas can now do for him. His mandate is to develop our distribution system. We have recently commissioned a dairy in Palamaner in Andhra Pradesh and we specially need to expand our distribution in the South. We are also launching several new products, for which we need new distributors. Should Amul be worried about Gowardhan luring away distributors? RS Sodhi, GCMMFs new managing director, is a 30-year Amul veteran who has spent most of his career working under Vyas. Hes not prepared to talk about his ex-boss controversial exit but hes blunt on the poaching issue. Only fools would leave Amul to join Go. We are a 60 year old brand. The brand is much larger than an individual, he says. Shah, for his part, declares that Amul isnt even competition anymore. Two years ago, when he moved bag and baggage from Manchar to Mumbai, he took the marketing department with him. Since then,

he has launched a series of value-added products, ranging from flavoured yogurts to chocolate flavoured cheese in tubes and more are in the pipeline. My real competition is Kraft and Danone. That is the space Go has occupied, he says. Despite being rooted in Maharashtras cow belt, the Shahs certainly have no pretensions of being simple rural folk. For example, Devendrabhai has always boasted the best car in town, whether it was an Audi100 in the 80s or the Audi A6 luxury sedan he now drives. This natural elitism is now propelling many of the groups new initiatives, such as a specialised bottling plant that will package fresh milk for Mumbais super-rich. Priced at around 70 a litre, the milk will be distributed only in South Mumbai, under the brand name Pride Of Cows. Parag Shah, the middle brother after whom the parent company is named, is in charge of Bhagyalaxmi Dairy Farms, the groups ultra-modern cow farm, next to which the new bottling plant is located. This product will go straight from the farm to the customers door. Only the upper crust will be able to afford it, he says happily. Products such as these will raise Gowardhans profile, but they will not propel it into the 4,000 crore-plus big league that the Shahs aspire to be in by 2015. For that, the company will need to expand distribution, which has long remained its Achilles Heel. When the company got into cheese production 12 years ago, the move was propelled by institutional sales. Located in a region that grows potatoes for McDonalds, Gowardhan has emerged as a major producer of mozzarella cheese for the burger and pizza chains. It also produces cheese for Britannia. With annual sales of 150 crore, cheese is now the third largest product in Gowardhans portfolio, after milk ( 220 crore) and ghee ( 200 crore). The company has now set up a brand new plant at Manchar, to produce cheese in every shape and form wedges, slices, shreds, powder, sauce, spread all marketed under the Go brand name. In a market thats growing at 30% annually, Go wants to be the leader. Indians love cheese, says Pritam Shah, the youngest brother, who looks after operations at Manchar. We put cheese on dhokla, khaman, dosa. If people dont consume cheese, its only because they cant afford it right now. The range of spiced-up cheeses (pepper, tomato, chili) that Go makes is quite a change from the standard cheddar Amul has been selling for decades now. Unlike butter and like wine, it is a category with limitless possibilities for variation and Vyas is certain Gos gamble on cheese will pay off. Its not that much of a gamble, given that there are only two domestic players in this segment, he says. Sitting in Manchar with his new partners, the ever-resilient Vyas is ready to put the events at Amul behind him. He still lives in Anand, travelling to Mumbai and Manchar at least once a week. When we met him at Manchar, he is there to address a conference for Gowardhans sales force. The young sales executives hang on his every word. These are great times for the dairy industry, he says. The Indian market is already huge and growing. Theres enough for Amul, Go and all the others. That would be a nice, conciliatory note to end on, but as Vyas knows, things dont always end on a nice note in the real world. So well end with RS Sodhi stressing how Amuls performance has actually improved since Vyas's left and he took charge. The latest AC Nielsen figures speak for themselves. Our market share in cheese has increased from 72% to 84% in the two year period from Jan-2009 till Dec-2010. Britannias market share has fallen from 16% to 8% and Go-Gowardhan has increased from only 1% to 3%. Wheres the big threat?, he says. Belittling the competition is de rigueur in the dairy sector. The rivalry here has always been upclose and personal, fuelled by ideological divides over the merits of cooperatives versus private companies and domestic brands versus multinationals. The Amul-Go battle is but the latest in an ever-sifting war that includes famed marketing warriors like Unilever, Mother Dairy, Nestle. Nobody can afford to rest on their laurels here.

R S Sodhi GCMMF

B M Vyas Parag Milk Foods

Pritam Shah Parag Milk Foods

Devendra Shah Parag Milk Foods