A PROJECT REPORT ON THE NEAR-EXTINCTION OF AMUL A MUL CHOCOLATES CHOCOLATES
PREPARED AND PRESENTED TO PROF. SATISH D. RAIKER
Submitted By: Kamini Sharma (Roll: 38) Neha Mehta (Roll: 53) Rituparna Das (Roll: 71) Date: 16.08.2010
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ABSTRACT
This report analyses and interprets the various r easons which might have led to the t he near-extinction of Amul chocolates. Amul chocolates made a determined entry into the Indian market in the nineties and continued favourably till a couple of years ago, but nowadays it is rarely seen on shop windows. With the launch of Amul c hocolates, the brand, popularly known for its milk and other dairy products, posed a serious challenge to the two foreign brands, Cadbury and Nestle. This aura seems to have faded now with the dipping market shares of Amul chocolates and The Taste of India has not been able to appeal much a s far as chocolates are concerned. This project thus establishes the market problem pr oblem of Amul chocolates as decreased market share, comparatively poor performance of Amul chocolates vis-à-vis other brands, low awareness level of
the brand’s chocolates and a not so favourable consumer behaviour towards the t he chocolate segment of this ot herwise renowned brand. brand. The project analyses and interprets the above market problem primarily with the help of a survey conducted in the form of a five-star marking system. The sample size for the survey has been taken as 50 respondents with age ranging between 20yrs to 25 yrs. The survey has been carried out via mobile text messages sent to known acquaintances all over India with majority of the respondents hailing from Kolkata, Hyderabad, Indore, Mumbai, Chennai, Mysore and Karnataka. The internet and newspaper articles have also been used as secondary resources in the conduct of the research. The market problem thus analysed and interpreted as per our findings, the project finally concludes c oncludes with our suggestions as to what Amul, the highly acclaimed domestic brand of India, could do to revive its stagnant chocolate chocolate division and bring it back into t he mainstream mainstream of the chocolate industry from the verge of near-extinction.
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ACKNOWLEDGEMENTS
We take immense pleasure in thanking Prof. Satish D.Raiker, our course facilitator for introducing us to the basic concepts of Marketing and initiating us into undertaking this Marketing Research.
We wish to express our deep sense of gratitude to our friends & family for helping us complete our survey and hence obtain the required data.
Finally, we would like to thank all the people at the Reprography Room for helping us in taking printouts.
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CONTENTS
Sl No:
Chapter Name
Page No:
1 2 3 4 5 6 7
Introduction Chocolate Market in India Amul-The Taste of India Amul’s Success Story Mixed-Bag Products from Amul Market Share of Amul Products Amul’s Inadequate Success in the Chocolate Segment Marketing Research Our Findings Conclusion: Suggestions Bibliography
5 6 6 7 7 8 9
8 9 10 11
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9 18 19 20
INTRODUCTION
Chocolate came into existence with the recognition of the valuable properties of t he cacao plant by the ancient Aztec and Mayan civilizations. It is reputed to have originated in the Amazon or Orinoco basin. Infact, the very word “chocolate” is said to have been derived from the Mayan "xocoatl" while the Mexican Indian word "chocolate" comes from a combination of the terms “choco” (foam) and “atl” (water). Arthur W. Knapp, author of The Cocoa and Chocolate Industry points out that if we believe Mexican mythology, "chocolate was consumed by the Gods in Paradise, and the seed of cocoa was conveyed to man as a special blessing by the God of the Air." That it was a blessing became evident as the various beneficial properties (including medicinal) of chocolate were discovered. The first chocolate house was reputedly opened in London in 1657 by a Frenchman. Once considered a beverage meant only for the elite, the Industrial Revolution led to the large-scale production of chocolate, thus spreading its popularity all around the world. Eating chocolate was first introduced in 1674 in the form of rolls and cakes, served in the various chocolate emporiums. Henri Nestle in The History of Chocolate and Cocoa declares that from 1800 to the present day, the following four factors contributed to chocolate's "coming of age" as a worldwide food product:
The introduction of cocoa powder in 1828;
The reduction of excise duties;
Improvements in transportation facilities, from plantation to factory;
The invention of eating chocolate and improvements in manufacturing methods.
Thus, by the 1990s, chocolate had proven its popularity as a product, and its success as a big business. Annual world consumption of cocoa beans averages approximately 600,000 tons, and per capita chocolate consumption is ever on the rise.
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CHOCOLATE MARKET IN INDIA As per A C Nielsen, in 2008 the branded chocolate market in India is estimated to be around 2300 crores, dominated by Cadbury (70% market share). Nestle, with 28% comes next. Amul and other minnows share the rest. The new brands include Sweet World, Candico and Chocolatiers. The range and variety of chocolates available in malls and other distribution outlets is ever on the rise which leads to lot of impulse sales for chocolate companies. The reasons for the substantial growth of the chocolate market in India can be summed up as:
Rising purchase power Chocolates which used to be unaffordable are now considered mid-priced. Designer chocolates have now become status symbols. Consumers can choose from a wide range of chocolates (almonds, raisins, all sorts of nuts, 5-star crunchy, and so on) Effective advertising and marketing strategies
AMUL — The Taste of India
The brand name Amul comes from the Sanskrit word “Amoolya” (meaning ‘priceless’) which was suggested by a quality control expert in Anand Amul (Anand Milk Union Limited) is a dairy co-operative movement in India formed in 1946 It is managed by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF) which today is jointly owned by some 2.8 million milk producers in Gujarat Amul, based in Anand, Gujarat, is a remarkable model of a co-operative organisation that also epitomizes the rural development of India Amul has spurred the White Revolution of India which has led to an increase in milk production, augmentation of rural incomes and fair prices for consumers. It is also the world’s biggest vegetarian cheese brand. Amul today is the largest food brand in India, the largest exporter of dairy products in the country, and the world's largest Pouched Milk Brand with an annual turnover of INR 67.11 billion (during 2008-09) Amul has strong overseas presence in Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Amul forayed into the chocolate segment in 1970 [6]
AMUL’S SUCCESS STORY
The reasons for Amul’s consistent successful performance in the Indian market scenario can be attributed to:
Robust supply chain Low cost strategy Mixed bag of products Strong distribution network New processing technology E-commerce
MIXED-BAG PRODUCTS FROM AMUL Amul is a giant business mainly in milk and dairy products. The wide gamut of products launched by the brand since its inception includes:
Amul Butter (Amul Cooking Butter, Delicious Margarine) Amul Milk Powder (Amul Full Cream Milk Powder, Amul Dairy Whitener, Sagar Skimmed Milk Powder, Sagar Tea and Coffee Whitener) Amul Ghee Amulspray (Amul Lite Low Fat Breadspread) Amul Cheese Amul Chocolates (Amul Fruit & Nut Chocolate, Amul Bindazz, Amul Rejoice, Amul kesar) Amul Sweets (Amul Srikhand & Amrakhand, Amul Mithaee Khoya Gulabjamaun, Amul Basundi) Amul Ice creams (Vanilla Royale, Royal Treat Range, Nut-o-Mania Range, Nature’s Treat, Sundae Range, Assorted Treat, Utterly Delicious, Amul Prolife Probiotic Ice cream) Brown Beverage ( Nutramul Malted Milk Food) Amul Milk (Amul Mithaimate, Amul Taaza Toned Milk 3% fat, Amul Cow Milk, Amul Yogi-a flavoured yoghurt, Amul Lite Dahi, Amul Buttermilk) Milk Drink (Amul Kool Flavoured Milk, Amul Kool Koko) Health Beverage (Amul Shakti White Milk Food)
As is evident from the wide range of the above mentioned products, Amul emphasizes on product diversification, seeking unfamiliar products or markets in the pursuit of gro wth with both dairy and non-dairy products. Mention must be made here of Amul’s endeavour [7]
to launch bottled water through ‘ Jaldhara ’, a venture which failed, leading to the subsequent abandonment of the product. Now Amul is all set to re-launch bottled water ‘Narmada Neer’. Amul thus has a propensity towards introduction of new products but never abandoning its core philosophy of “providing milk at a basic, affordable price.”
MARKET SHARE OF AMUL PRODUCTS
Category
Market Share
Butter, Ghee
85%
Milk Powder
40%
Cheese
50%
Ice cream
24.75%
Sweets Chocolate Drink
50%
Chocolate
10%
90%
Market Share Butter, Ghee Milk Powder Cheese Ice cream Sweets Chocolate Drink Chocolate
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AMUL’S INADEQUATE SUCCESS IN THE CHOCOLATE SEGMENT A shopkeeper in south Delhi has not been able to get supplies for quite some time. “We tried, but have stopped trying now,” he said. According to his account, Amul used to push chocolates by tying them to the offtake of milk and milk products. “Not so any more,” he said. With Cadbury (70% market share) and Nestle (28% market share) dominating the present chocolate sector of India, it is surprising to note that Amul, which is otherwise a successful brand in milk and dairy products, does not have a satisfactory performance in chocolates. The reasons may be summarised as follows:
Low expertise in chocolate-making Lack of foresightedness Being a small brand in chocolates, it brought in too many variants too quickly Diversion of milk fat, an important ingredient in chocolate-making, to producing liquid milk which is the co-operative’s core product Excessive discounts (for example, when ‘ Chocozoo’ was launched in 2004, a tub of ‘ Chocozoo ’ chocolates were priced at Rs 138 for 46 units of chocolates, but retailers could sell the chocolates loose, at Rs 3 each . This was done to attract kids) Failure of new brands like Rejoice, Kitebite, Nuts about you , Chocozoo Poor marketing strategy. Promotional and visibility failure against the competition posed by bigger rivals like Cadbury
MARKETING RESEARCH
a) Primary Data: Survey Method
1) Taste Table Of comparative survey as per Taste (cumulative)
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Taste
Cadbury 4.42
Nestle 3.81
Amul 3.03
Taste 5 4 3 2
Taste
1 0 Cadbury
Nestle
Amul
INFERENCE: As we can see from the graph regarding the Taste parameter consumers prefer Cadbury over the two other brands i.e. Amul being least tasty as per consumers.
2) Value For Money Table Of comparative survey as per Va lue For Money (cumulative)
Value For Money
Cadbury 3.94
Nestle 3.72
Amul 3.38
Value For Money 4 3.8 3.6 Value For Money
3.4 3.2 3 Cadbury
Nestle
Amul
INFERENCE:
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As we can see from the graph regarding the Value For Money parameter consumers prefer Cadbury over the two other brands i.e. Amul having the least value for money as per consumers.
3) Variety Table Of comparative survey as per Variety (cumulative)
Variety
Cadbury 4.178
Nestle 2.38
Amul 2.65
Variety
5 4 3 2
Variety 1 0 Cadbury
Nestle
Amul
INFERENCE: As we can see from the graph regarding the Variety parameter consumers prefer Cadbury over the two other brands i.e. here Nestle having the least variety as per consumers while Amul is ranked second after Cadbury.
4) Quantity Table Of comparative survey as per Qua ntity (cumulative)
Quantity
Cadbury 3.73
Nestle 3.36
Amul 3.47
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Quantity 3.8 3.7 3.6 3.5 3.4
Quantity
3.3 3.2 3.1 Cadbury
Nestle
Amul
INFERENCE: As we can see from the graph regarding the Quantity parameter, consumers prefer Cadbury over the two other brands i.e. here Nestle having the least quantity as per consumers and Amul is preferred after Cadbury.
5) Advertisement Table Of comparative survey as per A dvertisement (cumulative)
Advertisement
Cadbury 4.31
Nestle 2.99
Amul 2.35
Advertisement 5 4 3 2
Advertisement
1 0 Cadbury
Nestle
Amul
INFERENCE: As we can see from the graph regarding the Advertisement parameter, consumers prefer Cadbury over the two other brands i.e. Amul having the least Popular Advertisement as per consumers for its chocolates.
6) Packaging [12]
Table Of comparative survey as per Packaging (cumulative)
Packaging
Cadbury 3.94
Nestle 3.2
Amul 2.6
Packaging 5 4 3 2
Packaging
1 0 Cadbury
Nestle
Amul
INFERENCE: As we can see from the graph regarding the Packaging parameter, consumers prefer Cadbury over the two other brands i.e. Amul having the least Liked Pakaging as per consumers for its chocolates.
7) Availability Table Of comparative survey as per Availability (cumulative)
Availability
Cadbury 4.4
Nestle 3.94
Amul 2.18
Availability 5 4 3 Availability
2 1 0 Cadbury
Nestle
Amul
INFERENCE:
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As we can see from the graph regarding the Advertisement parameter, consumers prefer Cadbury over the two other brands i.e. Amul being the least available to its consumers.
Comparative Analysis As per All The Parameters Taken Together Table Of comparative survey(cumulative)
Taste Value For Money Variety Quantity Advertisement Packaging Availability
Cadbury 4.42 3.94 4.178 3.73 4.31 3.94 4.4
Nestle 3.81 3.72 2.38 3.36 2.99 3.2 3.94
Amul 3.03 3.38 2.65 3.47 2.35 2.6 2.18
Line Graph 5 4.5 4 3.5 3 2.5 2
Cadbury
1.5
Nestle
1
Amul
0.5 0
INFERENCE: According to the Line graph, it can be inferred that Cadbury has the populari ty and consumer support for all the parameters undoubtedly, wherein when we look out for Amul its above Nestle when we talk about Variety and Quantity else for all other parameters its preferred least by the consumers. Specially when we look for Taste, Advertisement, Packaging and Availa bility.
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Radar Chart Taste 5 4 Availability
Value For Money
3 2 1
Cadbury
0
Nestle
Packaging
Advertisement
Variety
Amul
Quantity
INFERENCE: Thorugh Radar chart we can infer that the consumer share of Amul is l east as compared to its two Competeters. The Region denoting Amul is contracted in the centre. When we compare it to the Market Leader in Chocolate it has the chocolate for the brand has acquired very low ratings by the consumers. Even when it is compared with the second Market Leader i.e. Nestle Consumer share except for a few criteria is very low.
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Secondary Resources Relevant Statements In Newspapers & Magazines from The Company Heads and Marketeers -
Report By Jayashree Maji Nov 18 2009 , New Delhi Amul chocolates, which made a determined entry in the market in the nineties and stayed put till a couple of years ago, is barely seen on shop shelves nowadays. The grit with which the brand, then only known for its butter and cute ads, posed a challenge to market leader Cadbury is gone. A two-horse race that became three-horse competition, with Nestle joining in, appears to have slipped back into a market dominated by the two foreign brands. The homegrown Indian brand, a household name more famous than its owner, Gujarat Cooperative Milk Marketing Federation, is barely visible in the chocolate market. Amul contests this. But try buying a bar of the brand, chances are that most retailers wil l shake their heads. This, when the brand has grown into a giant business in milk and other milk products. Cheese, ghee, ice cream and curd, for example. Marketing and branding aces blame the vanishing trick on poor marketing and low expertise in chocolate making. Another plausible reason could be the diversion of milk fat, an important ingredient in chocolate making, to producing liquid milk. Between 2006-07 and 2008-09 milk production in India went up from 100.9 million tonnes to 110 million tonnes, and the per capita daily mi lk consumption from 246 gm to 261 gm. At Amul, too, the milk output has grown rapidly – from 6.2 mil lion litres a day in 2005-06 to 8.5 million litres a day in 2008-09. Chocolate production – Amul claims it is growing -- still remains a very small part of its business. In 2008 the branded chocolate market in India was worth around Rs 2,300 crore (56,747 tonnes), dominated by Cadbury (70 per cent market share). Nestle, with 28 per cent, came next. Amul and other minnows shared the rest, according to A C Nielsen. In 2007, the market absorbed 49,487 tonnes worth Rs 1,700 crore. Vivek Agarwal, chief operating officer for Amul chocolates claimed an annual production growth of 15 to 20 per cent. In 2007-08, production was 1,000 tonnes, last year it was 1,200 tonnes. This year he hoped to touch 1,500 tonnes. He admitted chocolates contributed “probably half a per cent to one per cent” to Amul’s overall turnover (Rs 6,711 crore in 2008-09, Rs 5 ,255 crore in 2007-08). Expressing a hope not matched by recent performance, he said he expected to garner a 10 per cent market share in three years. To attain that, he said, Amul, would launch more products, begin [16]
marketing and communication in right earnest, and push for deeper retail penetration. Ground reality does not support his optimism. A shopkeeper in south Delhi has not been able to get supplies for quite some time. “We tried, but have stopped trying now,” he said. According to his account, Amul used to push chocolates by tying them to the offtake of milk and milk products. “Not so any more,” he said. Other than a lack of focus, Amul’s chocolate business also suffers from a poor marketing strategy. In chocolates it is a small brand. It brought in too many variants, too quickly. “It should have created a mother brand -- like Cadbury did with Dairy Milk or Nestle with Kitkat -- and then expanded the category,” said Harish Bijoor, an independent brand consultant. Amul has successfully extended its milkman image to ice cream, cheese and other dai ry products, but has made no headway in chocolate. Cadbury once tried to sell Bournvita biscuits but failed. Bombay Dyeing, known for bed linen, tried to sell Vivaldi men’s shirts and failed. “A brand must understand its fundamental associations,” said Anand Halve of Chlorophyll, a brand consultancy firm. The milk cooperative’s chief marketing manager, R S Sodhi, put the business priorities of the cooperative in perspective: “For us, chocolate is not big. We are not putting any advertising. Our focus is dairy and dairy products.”
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Report By Ruchita Sax ena & Pallavi Jha / Mumbai September 11, 2007
“In the chocolate business, our strategy is to identify the market gaps and try and fill them. We have done this in the past with our sugar free and Choco Zoo, both of which have been appreciated by the consumers. We are concentrating on the niche segment as far as the chocolate range is concerned,” says R S Sodhi, general manager, marketing, Amul. Company executives say that by occupying niche spots such as the shape-based chocolates segment, Amul can dominate the segment. In the overall category, Amul has a market share of roughly 10 per cent compared with 70 per cent share of the market leader, Cadbury. The growth in Amul’s chocolate sales has remained stagnant over the years. Industry experts say that since the company is present in more than one category, some of its categories have performed better than others. In Amul’s case, the bulk of its sales comes from its dairy products such as mil k packets.
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Report By Express News Service, Ahmedabad, November 29 2007
Announcing the all-India launch of its ‘Chocozoo’ brand of chocolates on December 9, B M Vyas, managing director of GCMMF, on Monday said: ‘‘The launch of this brand is in accordance with our revamped marketing strategy to reposition Amul chocolates in the market and take on competiton. In the last few months, we have introduced newer varities of chocolates, like ‘Bindas’, ‘Nuts About You’ and others, targeting teenagers but now we have somthing for the kids.’’ ‘‘In the last decade, Amul chocolates have taken a beating in the market. But
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now the co-operative is focusing again on this segment and we have introduced economic variants of our chocolates priced at Re 1, Rs 3 and Rs 5.’’ Vyas added that for the last one decade Amul chocolates have taken a beating from multinational chocolate firms but since the last one year Amul has reworked it chocolate strategy and is working with packing and advertising agencies to carve a niche for its brand. Amul’s product manager Pawan Kumar, addressing Amul’s Gujarat distributors in Ahmedabad, said: ‘‘With the launch of ‘Chocozoo’, we are creating a new category in branded chocolate market. So far, we have no competiton in this segment.’’ Pawan Kumar also said that a tub of ‘Chocozoo’ chocolates were priced at Rs 138 for 46 units of chocolates, but retail ers can sell the chocolates loose, at Rs 3 each. This, Pawan Kumar added, was done to attract kids. Pawan Kumar informed that Amul had already carried out a field trial of ‘Chocozoo’ in Ahmedabad and Vadodara and the results were exciting. In the last one month, Amul had sold 30 metric tonnes of the chocolate in gift packs available only in tins. However, following feedback from distributors and retailers, Amul had decided to come out with tub packings.
OUR FINDINGS From our analysis of the Primary and Secondary data, we have inferred that:
There is a lack of awareness about Amul chocolates among consumers Amul’s fundamental associations are with milk and milk products. Therefore there is not much focus on its chocolate segment Advertisements on Amul chocolates have not been able to create a deep impact on the minds of the respondents who undertook our survey. Like Cadbury, Amul does not have any brand ambassadors for the promotion of its chocolate advertisements which has failed in creating a lasting impression on consumers Cadbury and Nestle are the main rival competitors of Amul c hocolates The taste factor for Amul chocolates ranks low compared to Cadbury and Nestle. As far as availability, packaging and value for money is concerned, Amul does not have a satisfactory performance.
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CONCLUSION : SUGGESTIONS
Amul should take adequate measures to improve its service because though it occupies a top position in the milk and butt er sector, its sales in the chocolate division is sub-standard Amul should begin marketing and co mmunication in the right earnest and spread awareness among the masses about its chocolate products. Brand ambassadors can be used for the promotion of its products Advertisements on Amul chocolates are rarely aired on television nowadays. Few of the olden days advertisements, along with new ones should be shown on television so that potential consumers can relive their memories and get inspired to make purchases Amul, instead of going for newer products in its chocolate sector, should try and gain stability with the existing ones. It should also push for deeper retail penetration. Lastly, Amul should improve the quality of its chocolates, whether be it taste or wrapper designs, and in order to survive in the competitive chocolate industry Amul should take recourse to aggressive promotional activities and selling techniques.
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BIBLIOGRAPHY
http://www.mydigitalfc.com/reporter/Jayashree-Maji accessed on 13.08.2010 http://en.wikipedia.org/wiki/List_of_Amul_products accessed on 15.08.2010 http://en.wikipedia.org/wiki/Amul accessed on 15.08.2010 www.Moneycontrol.com accessed on 13.08.2010 www.amul.com accessed on 15.08.2010 www.amuldairy.com accessed on 15.08.2010
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