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Milk: an Indian success story

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.

His life story is inspiring and worth a place on your business book shelf.
For more see www.betterretailing.com

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