Financial Daily from THE HINDU group of publications
Friday, Jan 11, 2002
Corporate - Alliances & Joint Ventures
After pizzas, Amul plans foray into sugar
NEW DELHI, Jan. 10
THE Gujarat Cooperative Milk Marketing Federation (GCMMF - better known as Amul) is planning a foray into the branded sugar segment. The Rs 2,258.80-crore turnover cooperative dairy major is currently in talks with the National Federation of Cooperative Sugar Factories Ltd (NFCSFL) for the proposed venture.
"They have sought collaboration with us, so that we can source their sugar and sell it under the Amul or any other suitable brandname. We are working on it," the Managing Director of GCMMF, Mr B.M. Vyas, told Business Line.
The NFCSFL represents the interests of cooperative sugar mills, which account for around 55 per cent of the total sugar produced in the country.
"Our focus has so far been on selling sugar in bulk. This is because till recently as much as 40 per cent of our sugar was surrendered as levy to the Government for supplying to the public distribution system. But with the levy ratio being progressively reduced to 15 per cent, and the Government keen on withdrawing from the market altogether, we need to explore alternative avenues to sell our sugar," the NFCSFL President, Dr M.R. Desai, pointed out.
Dr Desai said that the talks with Amul were currently focused around using the latter's extensive marketing network of 3,000 distributors and five lakh retailers spread all over the country. "We are willing to supply them the sugar in packaged form, which they can sell under the Amul brand through their network," he added.
The branded sugar segment already includes names such as Modi and Dhampur, which are produced by mills in the private sector.
Mr Vyas, on his part, stated that the proposed marketing tie-up between two cooperatives for sugar was still in the incipient stage and "we are yet to take a final decision".
Amul already has such an arrangement for its Dhara brand of edible oil segment, wherein the oil is sourced from various State-level oilseed growers federations.
On Amul's plans to enter the coffee segment, Mr Vyas clarified that "we are not interested in selling plain coffee beans or powder to the retail consumer". Instead, the cooperative intends to sell coffee that can be consumed directly in prepared form at the retail end.
"I would like to see coffee primarily as a vehicle for pushing my milk sales. We are looking at a formula where coffee and milk can be sold together to the consumer," Mr Vyas said. In this context, he referred to the cooperative's recent pizza venture, "where our key objective was not to sell pizza per se as much as using it as a medium for increasing sales of our Mozzarella cheese".
Mr Vyas said that Amul's ultimate plan was to make available to the consumer "a good cup of ready-to-drink coffee for say, Rs 5".
He added that various options were being explored in this direction, including sale of coffee through vending machines that could be manually operated at the retailer's end. The coffee, in turn, may be supplied to the vendor in a pre-mixed form along with the milk powder and sugar.
"We are still working on an appropriate formula," Mr Vyas said, while refusing to put any immediate time frame for launching the product. He ruled out the setting up of exclusive retail parlours for sale of Amul coffee similar to those established by Nestle or Barista.
"We will sell Amul coffee through our regular retail outlets, just as in the case of our pizza. Our focus is on selling good, ready-to-drink coffee at affordable prices," he added.
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