Amul-Mother Dairy in bitter battle

Harish Damodaran

NEW DELHI, Jan. 22

IF you were under the impression that the current spat between the Gujarat Co-
operative Milk Marketing Federation (GCMMF or Amul) and the National Dairy
Development Board (NDDB) is at an abstract ideological plane, simply banish the
thought. What is taking place is not an ordinary "family quarrel" within the co-
operative fold, but a no-holds-barred kurukshetra with no quarter being given.

On Tuesday, NDDB's subsidiary, Mother Dairy Foods Ltd (MDFL), launched its butter
in the National Capital Region (NCR). While Mother Dairy's foray into the Rs 500-
crore table butter segment was not wholly unexpected, what has surprised
everyone, however, is the kind of aggressive pricing that it has resorted to at the
trade level.

MDFL is offering retailers margins as high as 10 per cent, compared to below 9.1 per
cent by Amul. The difference comes to 10 paise for a 100 gram butter pack and 51
paise for 500 gram packs. Even multinationals such as Nestle and Britannia, which
have sought to challenge Amul's hitherto unquestioned monopoly in butter, are not
doling out these margins.

Further, in the 900-odd bulk retail outlets owned by it in Delhi, Mother Dairy is
offering its concessionnaire operators margins of 96 paise (100 gram) and Rs 4.67
(500 gram). "When our butter was being sold through these outlets, the
concessionaires were given margins of only 50 paise and Rs 2.50. It shows how
keen they are to push their butter," a GCMMF official noted.

Amul today has a roughly 80 per cent share in the 45,000-tonne butter market. In
Delhi alone, the Rs 2,500-crore co-operative dairy giant sells about 550 tonnes per
month, leaving rivals — Britannia (40 tonnes) and Nestle (25 tonnes) — way behind.

Amul has preserved its market dominance by keeping consumers prices unchanged
for the last four years and forcing others to follow suit. Nestle, only recently, had to
reduce its maximum retail price (MRP) from Rs 15 (100 gram pack) and Rs 65 (500
grams) to Rs 13 and Rs 63, respectively. The other reason for Amul selling more —
despite offering lower retail margins — is strong consumer pull, resulting from its
brand being virtually synonymous with butter.
But the Rs 950-crore Mother Dairy's entry could well queer Amul's pitch. "Being the
market leader, it is we and not Nestle or Britannia who will be mainly affected. We
expect Mother Dairy to do monthly business of 50 tonnes in the Capital. Our
strategy is to prevent this from touching 100 tonnes," the official admitted.

The extent of bad blood between the two co-operative brands is also borne out by
other recent developments. From January 1, Mother Dairy has stopped buying milk
from GCMMF altogether.

Till last year, Amul was supplying around one lakh litres of milk per day for the Delhi
market. Mother Dairy has now decided not to renew the annual offtake agreement,
even as it has discontinued sourcing milk powder from GCMMF.

Until a year ago, it used to buy roughly 10,000 tonnes of powder annually.

GCMMF, on its part, has pulled out of NDDB's Clean Milk Programme, conferring co-
operatives the right to use the latter's `mnemonic' (milk drop) symbol on their
products, subject to meeting established hygiene norms. Amul's product packs no
longer display the familiar NDDB-owned logo.