Will Amul's Organic Initiative Lead to Price Hikes For Consumers? | Amul India's Growth Roadmap

But there is a part, there is a, there is a business which actually touches lives of most Indians and that is Amul India and some or the other, either the butter or the milk on the other massive amount of, you know, new products they are launching up. So we thought of getting a chat with Jayan Mehta, MD of Amul India, who is now joining us on the show. Mr. Mehta, good morning. Thank you so much for your time. So, you know, today we want to have a chat with you regarding your organic food foray. It is a big market. How, how differentiated would your product lines be? There is already very aggressive incumbents out there. How much do you aim to carve out for yourself in this next two to three years? Good morning. The point which you we are going to discuss is actually affecting all of us for what we eat and what is the quality of food that we eat. Is it free of chemical fertilizers or pesticides? And that's what actually brings Amul into the space of organics. And that's where our effort is to connect the producer who wants to convert to organics and find a market to consumers who want good quality certified organic products from a brand which they trust. So this is what our effort has been and we've launched about 25 products in the organic space, be it the Atta or the different types of fries or different types of dals and pulses and also ginger and healthy and also getting into sugar and jaggery and different types of masalas and bajara and all that stuff. So I think as a brand, if we are able to connect the producers with the consumers, giving them good quality food free from chemical fertilizers and pesticides, I think there will be a great contribution not just to the health of the country, but also to improving the carbon content of the soil, the productivity of the soil and regenerating the soil so that we are able to feed 1.5 billion people over the next several decades. Right, Mr. Mehta, You know, just to probe a little bit more about the organic foray that you're making right now because you know the kind of might and the kind of brand and the kind of trust that Amul brings it with it. It can actually take on all the MNC and all the private companies which are in the food market right now. But tell me is the procurement going to be like your milk business? Is it various suppliers which are going to come together under Amul and then you take it forward and supply it forward? See it is yes, you need to connect the producer with the consumer and when it comes to Amul and when it comes to organic its more of the certified farmers and producers. So there is a whole lot of activities happening in the background. We are the collecting milk the like we collect milk from the farmers. We are collecting the the raw material which is basically the grains or the rye wheat and the pulses from certified organic farmers and then processing Indian facilities which are certified organic. We have a lab which tests the products which is as per the free from pesticides and chemical fertilizers and so on to having the brand and putting in the market as the friend. So it's it's a lot of more collaborative effort and more importantly a new multi state cooperative which has been formed recently is the multi state cooperative on organics, which AMUL along with NDDB crypto and CDC NAFED, we have promoted it. So the job of getting farmers into organic, helping them convert to organic, helping them getting certification, waiting and hand holding with them for the three-year old three-year period which is required to get them certified and eventually setting up facilities to process and market it. So while we're doing, it appears that Amul is doing on its own, there is a whole lot of institutional and cooperative institutional support in the background, which has also started working on this initiative. And together we are actually wanting to make this change happen at scale nationally and not just with Amul brand. They also have a brand which the new multi state cooperative, we are promoting this Ave. the Bharat brand. So together we'll be able to make a big difference into this initiative that we have taken recently. You know, that's the other thing that I wanted to prove about Mr. Mehta, is it that, you know, in the next four to five years, how is it that Amul will reach and cover the entire span of the country? Because as of now, you know, barring a few products, it's very region specific a brand right now. And I was just going through your Amul organic website that of course is fabulous. But how is it that you actually plan to take this pan India and maybe even globally? Yeah, so that's that's what I said. We need to reach out to farmers who are already certified or 18 to do certification. There are several states of the country where you find organic products, but then nobody has done hand holding for them. So yes, it's a nationwide initiative. Almost from Gujarat to the northeast, from north northeast of Sikkim and Himachal and Himalayas down South. We, we, we find lot of lot of good work happening across the country. So Amul and the new multi state corporate organics both will actually do hand holding of all these farmers, even encourage more farmers elsewhere to get into this space, work on getting certification of their soil, use this AMUL circular economy model in which you are able to even convert the dunk of our cattle into organic manure. Get back to the field, use it extensively with the support that is required for a farmer and make this change happen. And of course, the brand has to have a national nationwide distribution network, which already we are there in more than 50,000 outlets. But yes, Amul is there in a million outlets. We need to catch up a lot, but that requires a lot of consumer education as well. And that's where we also want to democratize organic. People think that organic products are two to three times more expensive than the normal stuff which actually is not the case. So this is what our effort in educating the farmers, educating the customers, being the bridge between the board so that we are able to make a difference both in the life of the farmers and also for the consumers, right. Mr. Beta, just out of curiosity before we let you go, you know Aisha and I were just talking about you as such a desirable company to have in portfolios, right? 80,000 crore turnover, you have the best of products. We are self consumer products that Peterlin said own company, which you kind of, you know, consume on a daily basis, but you're a cooperative. Would you ever be a listed company? Would India see its largest FMCG company such as yours come to the market anytime? Well, we are part of your portfolio in any case. Yes, if any Indian spends on food and daily products, Amul and the daily products have a single largest segment. So I'm sure we we touch each one of you, OK. The Indias largest listed company has slightly less in shareholders as compared to us which is the 3.6 million farmers. So you actually need to be a person who has a cower Buffalo to own a share of Amul right at the village cooperative society level. Unfortunately, unfortunately, I let me put it that way, the model does not permit the equity market presence for a very simple reason, that if we are in the market, then we need to be facing the investors and trying to please them, which means we'll try, we'll displease our producers because when you spend ₹100 on normal products, 85% goes back to the farmer. Now to end, we've got very low margins, very low EBITA and the entire purpose is very clear that consumers get the best quality products at the most affordable price and the producers get the higher shares of the consumer revenue. Now this is the highest in the world. I mean, nowhere in the world a producer gets a more than 2/3 share of the consumers rupee, whereas in Europe, US, Australia, New Zealand producer only gets 1/3 share of what the consumer spends. So fortunately, this model is working well for the producers, it's working well for the consumers. It is seen as a model which can be replicated not just in India, but around the world. And obviously more than a billion Indian consumers are part of the whole family as well. So I think we we will be definitely be a part of the journey that you are. But the capital market doesn't seem to be a possibility for us, at least in the near future, right. Mr. Mehta, such a pleasure chatting with you. And I must say it was so nice to see when the, you know, South Africa jersey is having the Amul branding. I, I actually, when I saw you on the television, I, I was very happy with the mood of the, the studio right now there. So I wanted to make a point that I wish I knew the dress code, I would have won the jersey which gave them the best of blue. So you're very much part of Team India. Spirit doesn't matter. And I'm sure we're going to win the next match and we'll give you a fair ultimatum to get. Thank you. All right, Thank you. Thanks so much for your time today. All right, we'll take a short break. More news and analysis on the other side. Don't go anywhere.