CASE : GCMMF LTD

Problem Statement
 Whether GCMMF should stick to it’s core
business in dairy products ?
 (or)
 To diversify into other products,
particularly into processed foods
 Key differentiators of
GCMMF
 Business Model - Cooperative style of
management
 Run by farmers for the benefit of farmers
and end consumers – transparent and
fair
 Lean organizational structure > low cost
 Strong brand name for purity and quality
 Trust created among the consumers
 Scale and scope of operations
 Robust distribution network
 Cold chain network

 Product Portfolio
Category Market Market Growth Rate Competition Profitability
share position (98-99)
Liquid milk N.A 1 10 % Local players, Low (basic)
Nestle

Butter 80-85% 1 13% HLL, Nestle High margin

Milk powder 60-80% 1 18% Nestle, Glaxo, Medium
Heinz
Cheese 50-100% 1 39% HLL, Britannia High

Ice cream 30% 2 100% HLL, Regional High

players (Vadilal)

Edible oils 12% N/A ITC, Local Low (basic)

brands
Processed Food - - High growth HLL, Nestle
rate
 Analysis of Current portfolio and
Business Potential – Milk products
Milk Production in India in 1998-99 : 86

m ton
Potential available for further gr
 Procurement by organized sector : 40 m
ton
 Milk procured by GCMMF : 4.6 m ton
(12%)
Demand for milk (growth) : 8-10% per annum

Supply (growth) : 6 % per annum

Supply growth can be improved in long term (1000 kg per
lactation per animal vs 2000 kg in Dairy countries)
Per capita consumption of milk in India is 225 grams per
day (600 grams in other countries)


Sourcing and Processing – Excellent Infrastructure
created by GCMMF – which is it’s core competency
Analysis of Current portfolio and
Business Potential – Processed
food
 Processed food market in India : Rs 20 billion
 Premium food consumption is likely to increase due
to high disposal income
 Only 1.3% of total fruit & vegetable processed as
compared to 70 % in US > Good potential for
processed food
 Fruit and vegetable availability : spread across many
states
 Food processing industry is highly fragmented
 Huge storage facilities, strong logistics / distribution
net work to be created
 Competitors (HLL, Nestle) – First mover advantages
 Competition – GCMMF did not have a level playing
field
 BCG Matrix

High

Growth Rate

20 %

30 %
Low
Low Market Share High
 Critical questions for
diversification success (Processed
Food)
 What can GCMMF do compared to
competitors?
 Needs to further investment, separate
processing set required
 What strategic assets required?
 processing plants, existing cold storage
network?
 Can we leapfrog competitors?
 No. Competitors are MNC with strong
resources; Already in the business (First
mover advantage for them)

 Critical questions for
diversification success (Processed
Food)

 Will diversification break up strategic

assets?
 Yes, Milk products and processed food
requires different set of assets
 Will be a player or winner in new market?
 Only a player
 What GCMMF learn by diversification?
 Nothing specific to core business



 Conclusion
 Create awareness among users for more
consumption (health, advertisement
campaign)
 Improve supply side bottlenecks
 Continue and focus in Milk and dairy
products
 Exit processed food business



THANK YOU