Bussiness
Amul’s American dream
![Amul’s American dream Amul’s American dream](https://media.assettype.com/fortuneindia/2024-05/07fa99a6-d2c1-43e3-8a3c-8b68b3ce0058/Amul_1.jpg?w=700)
The company intends to launch fresh locally produced value-added products such as paneer, dahi (curd) and shrikhand. The question, however, is whether the Indian dairy major’s foray into the U.S. market (where it already exports long shelf-life products such as butter, ghee and cheese) with liquid milk will yield the desired results! The brand is entering a market where liquid milk consumption has been going downhill year-on-year. Though the current dairy market in the U.S. is $107 billion (according to Mordor Intelligence) and is projected to grow to $127 billion by 2029, the reality is that the average consumer’s milk consumption has been dipping 2-3% year-on-year. Bulk of the dairy consumption in the U.S. has been happening on the back of products such as cheese, yoghurt and probiotics. All major brands, be it Nestle, Fonterra, Lactalis or Danone, are in the business of value-added products.
In fact, the U.S. is a market where there is little brand loyalty in milk consumption. Consumers typically buy private brands sold by retailers such as Walmart, Target or Whole Foods. So, will Mehta’s strategy of making Amul a national milk brand in the U.S. really work? It is also a market where milk production has been stagnant. While the Indian dairy Industry is growing by 5-6%, the global growth rate is less than 2%. India is the world’s largest milk producer. However, most developed markets shy away from buying milk from India due to lack of traceability of source, which goes against domestic brands, says Rahul Kumar, COO, Parag Milk Foods.
For the dairy industry worldwide, traceability is an important criteria. “If you collect millions of litres of milk from millions of farmers it is difficult to trace from which village the milk has been sourced. Also, we source both cow and buffalo milk and the latter is not liked by the rest of the world. So, everything changes in terms of the profile of the type of milk. It is difficult to segregate cow and buffalo milk. In the U.S., one farm would have 50,000-100,000 cows, which makes traceability far easier,” explains Kumar.
In fact, Amul can’t even export its value-added products to most countries in Europe. One of the reasons is farmer objection in those countries and pressure on governments not to import, but traceability of Indian dairy produce also plays spoilsport.