GCMMF faces challenges in its core dairy business from competition and constraints on milk supply. It considers diversifying into agro processing and edible oils. For dairy, it plans to enhance milk procurement from existing suppliers and expand its supplier base. It will focus on value-added dairy products and exports. For ice cream, it will strengthen distribution and launch niche products. Edible oils have low margins and procurement issues, so GCMMF will transfer these operations. It will not enter fruits/vegetables due to procurement challenges and threats from private players. GCMMF will concentrate on growing its core competency in milk procurement and value-added dairy products.
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GCMMF faces challenges in its core dairy business from competition and constraints on milk supply. It considers diversifying into agro processing and edible oils. For dairy, it plans to enhance milk procurement from existing suppliers and expand its supplier base. It will focus on value-added dairy products and exports. For ice cream, it will strengthen distribution and launch niche products. Edible oils have low margins and procurement issues, so GCMMF will transfer these operations. It will not enter fruits/vegetables due to procurement challenges and threats from private players. GCMMF will concentrate on growing its core competency in milk procurement and value-added dairy products.
GCMMF faces challenges in its core dairy business from competition and constraints on milk supply. It considers diversifying into agro processing and edible oils. For dairy, it plans to enhance milk procurement from existing suppliers and expand its supplier base. It will focus on value-added dairy products and exports. For ice cream, it will strengthen distribution and launch niche products. Edible oils have low margins and procurement issues, so GCMMF will transfer these operations. It will not enter fruits/vegetables due to procurement challenges and threats from private players. GCMMF will concentrate on growing its core competency in milk procurement and value-added dairy products.
Copyright:
Attribution Non-Commercial (BY-NC)
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Download as PPTX, PDF, TXT or read online from Scribd
GCMMF faces challenges in its core dairy business from competition and constraints on milk supply. It considers diversifying into agro processing and edible oils. For dairy, it plans to enhance milk procurement from existing suppliers and expand its supplier base. It will focus on value-added dairy products and exports. For ice cream, it will strengthen distribution and launch niche products. Edible oils have low margins and procurement issues, so GCMMF will transfer these operations. It will not enter fruits/vegetables due to procurement challenges and threats from private players. GCMMF will concentrate on growing its core competency in milk procurement and value-added dairy products.
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Strategic Marketing: GCMMF Case
Objectives To analyze the feasibility of diversification of GCMMF from its core dairy business into Agro Processing Edible Oils
To suggest strategies (Corporate, SBU, Product levels) for growth of GCMMF
Problems Milk Supply Constraints Competition from private players Government policies (Co-operative VS Corporation) How to remain both Customer and Supplier Centric? Opportunities to diversify in Agro processing and Edible Oils
Challenges Milk market saturated from supply side 6 % milk production growth rate; 8 to 10 % demand growth rate Low per capita consumption of milk (225 mg) Low milk yielding cattle Low procurement penetration (1.7% of total milk produce inspite of having a base of 22%) Challenges to maintain supplier loyalty
Strategy (Intensive Integrative Growth)
Increase the number of V.S. and members per V.S Financing and credit for buying and rearing livestock Standardize and expedite payments Procurement from other state federations with surplus Improve the supply base of milk and reduce wastage Use of technology to automate collection and handling Flexible pricing strategy to encourage selling of more milk Demerits: Costs associated with technology investments Fragmented milk collection centers
Demerits Cost of financing and defaulting Conflict with other state MMFs
Increase Supplier Base
Increase Milk Supply of Existing Base
ICE CREAMS HOW TO CAPTURE MORE MARKET? BECOME NO 1 FROM NO 2 ?
Vadilal strong in west HLL traditionally the leader in organized sector with Kwality Walls Amul making rapid inroads
Indian Ice Cream Market
Total Size: 10 billion Rs
Organized sector: 3.5 billion Rs (30-35%)
Major Players: HLL (Kwality, Walls), Amul, Vadilal
Western Region most important West - 40% ice creams consumed North 30% South 20%
Expected to grow continuously for few years due to lower base
Per capita Ice cream consumption: 0.12 Liters (USA: 23.3 Liters)````
Challenges Established players entrenched Impulse product, so visibility means purchase Difficult to reach consumer Costly distribution infrastructure
Opportunities Huge opportunity to tap Rs. 10 bn unorganized market Since Amul ice creams are low priced, ensure greater consumer base if availability is ensured.
Strategy - Ice Cream
Two pronged Market Penetration New Products Attack the market leader using a combination of price and distribution, aim to become the market leader Ice Cream industry has wide open gaps, recognize them and create multiple niche products to capture the market
In accordance with the vision of Mr. Kurien, capture the premium segment of ice creams before other players (Indian/MNC) move in
Strengthen the distribution and cold chain specific to ice cream, especially in non metros
Strategy - Ice Cream
Exclusive retail outlets in Metros Amul Parlors Mobile vendors to increase penetration and availability around residential areas and schools
Use its existing good connections with the super markets to get more visibility at POS
Pro Increased availability increased purchase Attractive market worth investing NPD
Con Increased cost of distribution,
High real estate cost of parlor in up-market areas
Exclusive AMUL retail outlets
A retailer cannot stock the entire product range that GCMMF has to offer
An exclusive parlor for ice-creams and allied milk products
Based on response extend the full product line to the franchise
To be opened in metros as well as developed non metros exclusive franchise model
VALUE ADDED MILK PRODUCTS
HOW TO GET HIGHER SWEET PROFITS FROM MILK?
Challenge Milk Supply < Milk Demand
Local Mithai sellers offer better prices to dairy farmers,(due to better margins in mithai) further reducing our procured volume.
R&D to increase shelf life of milk sweets
Change consumer attitude towards packaged sweets as opposed to Fresh from the neighborhood mithai shop. This will take time
Opportunity Liquid milk Market Size: Rs. 1,67,000 Cr Stagnating segment of the Indian Dairy Industry Operating Profit Margin: 36% Market Share:
Mithai Market Size: Rs. 50,000 Cr Fastest growing segment of Indian Dairy Industry Profit Margin: 94% (Highest in the dairy industry Acceptability of mithai of 1 region by the other
Hence Amul may think of entering the traditional Indian Sweet market with Gulab Jamun, Rasgulla, Barfee, Kheer, Mishti Doi, Peda, Kalakand, Chenna sweets etc.
Strategy Contract Manufacturing of Mithai
Sold under the Amul brand name Selling through existing retail outlets by tying it with other Amul products Leverage supplier skills to manufacture sweets (village SHGs and Gram Udyogs)
Pros Higher margins better price to farmers higher volume procurement of milk. Better use of existing supply chain Export Opportunity
Cons New business, increased complexity New category, higher ad expenditure Branded sweets, not an easy switch for consumers as yet.
Exports and other product strategies
Other value added products Butter & Cheese Smaller SKUs Contract Manufacturing from other state MMFs Low Fat Low Sodium Table Spreads Penetration beyond metros and tier -1 Ghee Commercial packs(15kgs) Smaller SKUs for consumer segment Exports The Middle East, SAARC, ASEAN No significant dairy processing facilities Zero import duty on specific dairy products Significant cost advantage over European manufacturers Large Indian populace (est. 8 million) Opportunities Indian Sweets Cottage Cheese Condensed Milk Table Spread
SBU - EDIBLE OIL
Challenges Challenges Low margins
Low penetration of branded oils
Shrinking supply base (60% imported)
Opportunities Growing demand Leveraging existing supply chain Rural market yet to be captured by branded players
Strategy Do not enter the segment. Transfer marketing operations to NDDB Rationale: Edible Oil Production VS Import (MMTPA) 14
Zero Percent Import duty on edible oils (40% on dairy products)
12 5.7 10 5.59 5.63 5.41 8 5.16 5.36
Stiff Competition from MNCs in the sector
5.14
Shifting trends towards Palm and Soyabean Oils from Sunflower and Groundnut Co-operative model for procurement ineffective (trials in MP 1995 for soyabean)
4 3.4 2 3.1 5 5.6 6
6.65
7.44
01
02
03
04
05
06
07
Scattered procurement hubs (beyond Gujarat)
India Production Import
SBU PROCESSED FOODS
Strategy Do not enter into fruits and vegetables processing Focus only on Dairy Rationale Fruits and vegetables are dependent on environmental conditions and hence grown in geographically disparate locations. Gujarat produces only guava, potato, onion, cumin and banana GCMMF has always leveraged its deep roots in the state of Gujarat whereas fruits and vegetables need procurement at a national level
This makes procurement a challenge.
Significant threat from the Farm to Fork Model of Private Players
Conclusion GCMMFs competency is in milk procurement which is being challenged Concentrate on growth in milk procurement and create large entry barriers for competitors by enhancing supplier loyalty Concentrate on further enhancing contributions of value added milk products Look for business opportunities where simultaneous development of supplier and market is possible and profitable
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