On the road to Karnataka: What’s in store for Amul
A huge political outburst occurred when Amul last week announced that it is planning to enter Bengaluru market where Karnataka Milk Federation’s (KMF) Nandini has been ruling for decades. The slugfest began as soon as Amul tweeted about its plan, “A new wave of freshness with milk and curd is coming to Bengaluru. More information coming soon. #LaunchAlert. From Kengeri to Whitefield, wishing everyone a Taaza day." Opposition Congress accused BJP of trying to bring Amul to Karnataka to destroy the state’s dairy brand. The people of Karnataka also came out in support of Nandini and #gobackAMUL soon started trending on Twitter. Hashtags like '#SaveKMF' were also used to show support to Nandini. The backlash that Amul is facing has left many wondering what does the future hold for the brand in Karnataka? Experts, however, believe Amul’s entry into the market isn’t a threat for Nandini but a healthy competition. Just a polling plank? Karnataka legislative elections are due in May and the entire Amul vs Nandini controversy seems to have been fueled up by contesting parties. Ever since Amul tweeted about its plan to enter the state on April 5, politicians took to social media and television to condemn the move. Senior Congress leader Siddaramaiah asked PM Narendra Modi on twitter, "Is your purpose of coming to Karnataka to give to Karnataka or to loot from Karnataka? You have already stolen banks, ports and airports from Kannadigas. Are you now trying to steal Nandini (KMF) from us?" Current CM of Karnataka Basavaraj Bommai denied these allegations and said “Nandini is a national brand. It's not restricted to Karnataka.” This shows how the Amul vs Nandini saga is turning into a polling plank right before elections in the state. Speaking on this, Lloyd Mathias, Business Strategist and Independent Director, says, “I think it's not really a controversy. It's a bit of a manufactured controversy, given that elections in Karnataka are around the corner and politicians need something to rabble rouse and create an atmosphere. I think Amul is a very strong brand when it comes to processed dairy. They are market leaders in products such as butter and cheese. They are very strongly placed in the tetra pack category also.” “But this is obviously a controversy and may get triggered in other states as well. Because Amul is from Gujarat, there is a political angle to it. So, I think that's really the issue,” he added. Tough road ahead but co-existing possible Nandini is reportedly one of the cheapest milk brands in the country and is extremely popular in Karnataka. Although Nandini has been the main milk producer in Karnataka, experts believe little bit of healthy competition will actually boost the category in the market. Samit Sinha, Managing Partner, Alchemist Brand Consulting, says that there will be initial hurdles because of the social divide between North and South brands, but co-existing is possible for both Amul and Nandini. “Despite large-scale inter-state migration, the socio-cultural divide between North and South India is real, whether it is to do with entertainment celebrities or brands. There are many strong brands in the southern states of India that most North Indians would be unaware of, and vice versa. It is only cricket and cricket stars that seem to cross over seamlessly. Having said that, Amul, the much-loved brand in the rest of the country, is likely to struggle in the southern markets, at least initially. But there’s no reason why it will not be able to co-exist with the Nandini, eventually,” opines Sinha. Lloyd Mathias feels more choices mean better products for consumers. “For the consumer, it means better choice, better products. It's really not a threat. Today you go to any supermarket anywhere, you can see a range of brands, a lot of private labels. There isn’t just one choice. Secondly, in Karnataka, Amul is planning to just sell its products directly through the e-commerce segment, and maybe in some instances, they will also go to modern trade, which is a large supermarket where you'd have tetra pack products. They're not going to go into the neighborhood store where Nandini has its parlours.” Ashish Bhasin, Co- Founder and Chairman RD&X Network, mentions that brands have emotions attached to them. “For legacy brands like Nandini, there is trust developed over generations. In that position, for another brand to come and penetrate, can be challenging. However, it can be possible and competition helps in the growth of the category,” he shares. “These things take a lot of time and it's not going to be an easy entry, but eventually, good competition, healthy competition actually grows the category in some way. So, it will probably benefit both the brands, provided it is done with a positive spirit of a healthy competition. It shouldn't deteriorate into a bickering scenario, because that actually will work negatively for the entire category and both the players. It is going to be something that will take months, years and perhaps decades. It's not something that you will see an immediate kind of flip over.” The key challenge that Amul faces is winning the hearts of the Karnataka consumers. Amul will have to think what is it that they're going to give the people that is different and will appeal them to try the brand.”
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