In one of my previous articles, I had done a detailed SWOT Analysis of a really fascinating brand, Patanjali Ayurveda. In this article, I have done a similar analysis and have compiled the SWOT Analysis of Amul.
Amul is a milk co-operative founded by Mr. Verghese Kurian in 1946. The company has its headquarters in Anand, Gujarat. Amul is an acronym for “Anand Milk Union Limited”, and Mr Verghese Kurian, the founder of Amul, is also referred to as the father of the white revolution in India.
Amul is the largest Indian milk and dairy products manufacturer and is considered as one of the most well recognized and iconic brands in the country. The company was incorporated to protect the interest of the consumers and the milk producers in India.
Presently, Amul produces and gathers milk and milk products and distributes more than one million liters of milk every day.
Let us analyse the SWOT Analysis of Amul which can offer us an insight into Amul’s transition from being a dairy producer’s cooperative society to becoming one of the most recognized and respected brands in India.
What is SWOT Analysis?
SWOT Analysis is a strategic analysis framework used to evaluate the competitive position of the company for developing strategic plans.
SWOT stands for Strengths, Weaknesses, Opportunity and Threats of the company to assess the internal and external factors, along with present and future potential.
SWOT Analysis of Amul
Amul is a really strong and dominant brand in its category. The SWOT Analysis of Amul that I have shared with you below is based on my understanding and my research of the success story of Amul.
My intention behind putting together this SWOT Analysis of Amul is to help you put together similar kind of points for the other companies for which you might want to do a SWOT Analysis.
Strengths of Amul
Strengths are always internal to a company. A strength is something that comes from within the company, from its people, its process or the resources employed by it. Here are the strengths from the SWOT Analysis of Amul.
1. Investment in Technology
Amul has experienced exponential growth in the last few decades. The company is continually investing in adaptive and revolutionary technologies within the dairy industry. The company is targeting a turnover of Rs. 50,000 crore in the fiscal year 2020.
2. Production Capacity
Amul is one of the largest manufacturers of milk and dairy products in the world. The company is managed by the Gujarat Co-operative Milk Marketing Federation Limited, which is a dairy producers cooperative which supplies the company with almost 18 million liters of milk daily.
3. Market Share
Amul has transformed itself into the market leader of milk and dairy products in the country. For instance, Amul has a market share of 33 per cent in the organised ice cream industry. The ice cream market is expected to grow by 30 per cent.
Amul has expanded its ice cream product and business portfolio by opening standalone Amul ice cream stores all over the country.
Furthermore, the flavoured milk industry in India is also expected to grow by 20 per cent, and once again, Amul is a market leader in flavoured milk in India.
4. Strong Brand Value
Amul is one of the most recognizable and valuable brands in India. The Amul girl, the company’s mascot which features on its advertisements is one of the oldest and most iconic brand mascots which Amul uses even today.
None of the milk or dairy products brands in India has come close to the public image or brand value which Amul enjoys in the Indian market.
One of the primary reasons for Amul being one of the most trusted brands in Indian and having a strong and loyal consumer base is its quality. Amul has never faced any significant issues pertaining to its quality within the Indian market. The company has also maintained transparency concerning its quality control practices.
Amul maintains excellent relationships with the health department and government agencies. Validation from these authorities further develops trust within the minds of the consumers about the quality of Amul’s products.
5. Large Consumer Base
The company has a large consumer base which spreads across the urban and rural regions of the country. This wide-reaching consumer base has allowed the company to maintain distinct leverage over its competitors
Weaknesses of Amul
Just like the strengths, weaknesses are also internal to the brand or the company. You could see it as lack of certain aspects in the business that makes it vulnerable. Sometimes, certain strengths bring with them certain weaknesses. Examples of that is, however, the matter of another blog post.
So, here are the weaknesses from the SWOT Analysis of Amul.
1. High Operational Cost
Amul has a high operational cost due to its massive size and complex structure. This can become problematic for the company if the company experiences fall in demand.
The company also heavily depends on the dairy unions and communities for its supply of milk. As the needs of the dairy community are changing with them demanding higher prices for their produce.
These issues can add up to the operational cost of the company and lower its profit margins.
2. Lack of Success in Certain Areas of Portfolio Expansion
Amul has expanded its product portfolio to add products such as butter, ghee, buttermilk, flavored milk, ice cream, chocolates, cheese, creams, sweets and more.
However, not every product of Amul within its portfolio has tasted the same amount of success.
For instance, Amul’s chocolates have not been able to replicate the success of its ice cream brands. Amul chocolates have a tiny market share in the chocolates, sweets and confectionery market in India.
3. Frequent Legal Issues
The company has faced legal issues in the recent past wherein Amul chose to advertise its products while disparaging the brand and products of its rivals. This led to Hindustan Unilever filing a lawsuit against Amul in the Bombay High Court.
In 2017, The Bombay High Court passed a verdict in favour of Hindustan Unilever. This caused the company a lot of embarrassment and has also contributed to tarnishing the public image of the company.
Opportunities for Amul
In the SWOT Analysis, Opportunities are the points that can be and should be converted to the strengths of the company. In the case of the SWOT Analysis of Amul, I have listed below the opportunities that can be worked on by Amul.
1. High per capita Milk consumption
India is a high milk consuming nation with milk and dairy products being an essential component of the Indian diet. According to research, Indians consume almost 100 liters of milk per annum.
India has a billion plus population which is only increasing. This growth in population and high milk consumption opens up opportunities for Amul to expand its production capacities and acquire new consumers.
2. International Expansion
Amul can serve global markets. The brand can expand into overseas markets such as the Middle-East and the Asian markets by aggressively targeting Indian expats living in these countries. Amul can organically broaden its international presence and consumer base.
3. Expansion of Product Portfolio
Amul can invest in research and development or adopt a mergers and acquisition strategy to expand its product line. Amul has an extensive distribution network which can be used to sell its new products into the market, and the substantial brand value and trust of the consumers will also enable easier acceptance from the consumers.
Threats for Amul
The way a company should take care of the threats is by working on its strengths to mitigate the effects of threats. Some organisations who are in a niche, niche down further to mitigate the risks of a competitive environment. I have listed below some of the Threats for Amul.
1. Increasing Competition
Amul is facing increasing competition in milk and dairy products sector from brands such as Mother Dairy, Aavin, Kwality Ltd, Nadini Dairy, HUL and other local players. Amul is also facing increasing competition within the ice cream sector from Kwality Walls, Baskin Robins, Havmor, London Dairy and other domestic brands
2. Growing trend of Veganism in India
Many people in India are turning towards veganism, which implies that these people do not consume dairy or dairy products. This can impact the demand for Amul’s milk and dairy products if the popularity of veganism increases and spreads across different parts of the country.
The SWOT Analysis of Amul enables us to understand how Amul has transformed from a dairy cooperative to one of the most valuable and trusted brands in the country. The brand entices a sense of national pride among the consumers, and this brand image can be further exploited to enter overseas markets.
The company can achieve a dominant global position by maintaining its quality standards, investing in advertising and promotions and localizing products as per the taste of the international markets. Amul has the potential to replicate its success all over the world.