There
are many ideas in Verghese Kurien’s autobiography I Too Had a Dream that will
stir the minds of independent retailers. His is the story of how the little guy
wins. Of how to work with markets to win success. Of the importance of
marketing. And how to leverage advantage from your connections.
Dr Kurien's achievements are remarkable. How he developed the Gujarat Cooperative Milk
Marketing Federation in a sleepy rural town 350 miles north of Mumbai, India
has lessons for independent operators in the UK today.
The
town Anand started supplying milk to Mumbai in the 1940s after a milk scare. An
enterprising businessman Pestonjee Edulji, who owned the Polson butter factory
in Anand, persuaded the British to give him the rights to supply milk to the
city.
Armed
with the sole distribution rights, Pestonjee first created big demand for Anand
milk and second exploited the farmers who produced it. The British were happy
with the better milk supplies and Pestonjee became very wealthy.
However
Anand is in Gujarat, the home state of Mohandas Gandhi. Gandhi's right hand man
Sardar Patel encouraged the farmers to work together to get a fair deal. By
coincidence the Indian government sent the young Dr Kurien to work with the
co-operative and he provided the leadership to make them successful.
In
1946 the co-operative asked the commissioner of the Bombay milk scheme to accept
milk direct from them. The commissioner said no. The farmers went on strike and
poured all their milk away. For two weeks, Polson could get no milk and its
agreement with the Bombay milk commissioner collapsed. Over the next 18 years,
the co-operative competed with Polson and won.
“We
had one clear advantage in that unlike private companies impatient to make
profits we were very patient,” says Dr Kurien.
He
organised all the local milk co-operatives together and created a marketing
organisation so they could sell effectively and he created a brand Amul that
today is the market leader in India.
“One
of the earliest lessons I had learnt was that Amul existed because barely a few
hundred kilometres away Bombay existed. There could be production here only
because a market was there.” While the Bombay milk scheme had exploited the
farmers, it had also created the market opportunity for them.
When
they started selling butter under the Amul name they found it hard to reach the
market as it was controlled by Anchor butter from New Zealand and Polson’s
products. So Dr Kurien lobbied the Indian government to cut the import of
butter, which it did. This created an opening for Amul butter to achieve
distribution.
Unlike
private suppliers, who watered down products, Amul always delivered quality.
Its butter was purer than the competition but users were accustomed to the
Polson taste. So Amul had to get the colour and taste and salt levels correct.
Giving the “customer quality products” was the value that meant when its
advertising grabbed attention, consumers liked what they bought.
After
this success the Indian government, which was of a socialist bent, asked
Dr Kurien to introduce the co-operative model to other parts of India. What he
found was the vested interests in other Indian states made it hard to reproduce
his successful business model.
Perhaps
his greatest success was leading the National Dairy Development Board. He came
up with a plan to use surplus food from Europe to rebalance the milk market in
India so that local suppliers could compete with multinationals and to increase
milk production. From the 1970s to the 1990s India moved from a position where
it was an importer of milk to becoming the largest milk producer in the world.
In 30 years the NDDB plan doubled the milk available per person and made dairy
farming successful.
Dr
Kurien helped the small farmer win because he encouraged them to:
·
Equip
themselves with the latest technology
·
Set
themselves world class standards
·
Put
in place systems that ensured they consistently achieved high standards.
For more see www.betterretailing.com.
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