The recent news that Gujarat Cooperative Milk Marketing Federation had signed an agreement with Wal-Mart to stock its shelves with products under its Amul brand name is proof that the 'the taste of India' has finally arrived.
But this is not the first time that Amul will be stepping foot on US soil. Amul has been in the US since 1998 through Kanan Dairy, which markets Amul processed cheese, pure ghee, Shrikhand, Nutramul, Amul's Mithaee Gulab Jamuns to more than 1,000 ethnic Indian grocery stores in the US through a network of seven distributors.
And this may just be the right time to go full-fledged into the US market via discount stores like Wal-Mart. Dairy prices - milk, yogurt, ice cream, cheese - are at record highs primarily due to lower dairy cattle and high gasoline prices in the milk trucking industry. Mozzarella cheese prices have been increasing in the past one year. And mozzarella cheese is an important part of Amul's product portfolio. Amul decided to go up the food chain and into the mini-pizza market in India only to proliferate the consumption of mozzarella cheese, thus giving Britannia a run for its money in the cheese market.
Now, since milk is an integral part of the American diet, consumption levels will be almost maintained. But, consumers may seek out low-priced stores like Wal-Mart not only for milk but other dairy products as well. This will work to the advantage of Amul.
While the potential is enormous, the key to Amul's success will be its ability to localise. For instance, when big MNCs came looking to capture a slice of the pie of the growing emerging markets, they decided to customise their offerings. Like McDonald's introduction of Aloo Tikki, in deference to the Indian palate or when Pepsi coined the Yeh Dil Maange More tag-line in India.
Amul will have to customise its products and look outside the ethnic box to suit the American and other ethnic palates. It simply cannot use its home-ground strategies in the US and expect to make a mark, even if Wal-Mart plans to push the brand only in stores and only in states like New York and New Jersey, where the Indian community is very strong.
Still, with more than 50 per cent of Americans being medically obese, and if Amul is really looking to capture the hearts of the second- and third-generation Indians, offering low-fat versions of its brands, would make a lot of commercial sense.
And baiting the two-million strong Indian community with an estimated disposable income of more than $88 billion with ethnic products like Amul Mithai makes commercial sense for the $257-billion Wal-Mart. As such riding piggyback on chain stores like Wal-Mart, which has 3,200 stores in the US and another 1,000 internationally, augurs well for Amul.
Amul can be a potentially strong brand in the US. There is certainly evidence of foreign brands capturing a large part of the domestic market. It has happened in India - a classic case being Unilever, which adapted and created products to suit the needs of the Indian population. It has happened in the US, when Japanese automakers flooded the US car market with cheap cars. And, it can happen with Amul in the US dairy market.
While Amul wants to focus only on the Indian market for the moment and is just 'testing' the foreign waters, it has already travelled to India's neighbouring countries, Singapore and Hong Kong. And it will now be available in Dubai and other Middle Eastern countries as well. Amul's export strategy seems to be paying off. In fiscal 2003-04, Amul's innovative marketing strategies achieved around a 20 per cent increase in sales to Rs2,893 crore, including export revenue of Rs50 crore.
Amul has come a long way from 1946 - when it collected only 247 litres of milk a day - to the six million litres of milk per day it now collects from about 10,675 separate village co-operative societies throughout Gujarat. With access to low cost milk, an innovative and almost 'just-in-time' supply chain, a ready market among the Indian community and 50 years of understanding milk, Amul can definitely build the 'taste of India' in the US. The only question is - when?