Amul Hikes Product Prices By 4-5% As Demand Recovers

India’s biggest dairy products maker hiked prices by 4-5% across categories as it sees better demand than last year when the world’s biggest milk-producing nation was under a complete lockdown to curtail the first wave of the Covid-19 pandemic.

Gujarat Co-operative Milk Marketing Federation Ltd., the owner of Amul-branded products, didn’t increase prices in the last financial year, Managing Director RS Sodhi told BloombergQuint over the phone.

“Last year, due to low prices of milk, we built an inventory (in the form of skimmed milk powder that can be converted into other milk products). It made no sense to sell at lower prices. Now that we have increased prices, we will slowly start liquidating last year’s stock,” Sodhi said.

Volumes, according to him, are also better this year. “FY22 will have an extra volume of 12-13% from the previous year due to the liquidation of inventory at a higher price.”

The milk federation in the fiscal ended March 2021 saw its sales grow at the slowest pace since 2004-05. Its turnover, Sodhi said, rose 1.7% to Rs 39,200 crore during the year.

That compares with peer Britannia Industries Ltd.’s 13.2% increase in revenue in FY21. ITC Ltd.’s FMCG other categories, that includes food division sales, saw its revenue rise 14.7% during the period.

But GCMMF, Sodhi said, saw 15-16% sales growth in the April-June quarter over the prior year.

  • Branded products largely drove growth for the dairy company in 2020-21. The segment, Sodhi said, grew 9%.

  • Institutional sales and that of commodity, ice-creams were impacted the most, growing at 2% in FY21. That’s because demand from hotels and restaurants, and the catering segment was almost negligible due restrictions almost throughout the year.

  • The contribution of commodity to GCMMF’s revenue, according to Sodhi, stands at 8-9%, while ice-creams account for 5%. Institutional sales form 10-12% of the federation’s revenue.

  • Amul’s revenue in FY21 rose to Rs 53,000 crore from Rs 52,000 crore in the prior fiscal.

Sodhi is confident that the company will achieve its Rs 1-lakh-crore turnover target by 2024-25. He expects it to grow by 20-25% every year.

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