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Sep 22

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Amul is India’s most LOVED brand! It earns INR 61,000 Cr revenue ⇒ 1.2x the combined revenue of Nestle, Britannia, Godrej & Dabur! But advertising spend for, 1. Top FMCG brands: 8-15% of revenue 2. Amul: 1% of revenue 🤯 Learn how to buildd your startup’s brand from Amul 🧵

Structure: 1. Firstly, a brief history of Amul 2. The beginnings of Amul's iconic advertising 3. So, what is Amul's SECRET sauce for great advertising? 4. But, how effective is Amul's family branding approach? 5. Closing thoughts

1/ Firstly, a brief history of Amul Amul's origins date back to the 1940s. Back then, Polson dominated the dairy industry around the area of Mumbai. But, Polson exploited farmers by buying milk from them at a lower rate and selling it at a much higher price. (contd.)

The milk was also adulterated with water to get higher margins. Sardar Vallabhai Patel, India's first home minister, became aware of this situation and wanted to rectify this. He urged the farmers to form their own organization to supply milk to Mumbai directly. (contd.)

This would serve two purposes: a. Consumers would get quality milk & milk products at reasonable prices b. Farmers would also get a fair price for their products And thus, Amul or Anand Milk Union Limited was born. (contd.)

Originally, this was a tiny cooperative consisting of just the farmers from Anand, a small town in Gujarat. But in 1970, Dr. Varghese Kurien, the pioneer of Amul, was tasked with replicating the Anand model across India. (contd.)

This phase popularly known as the “white revolution” put India on the global dairy map. Today, Amul is the largest milk cooperative in the world, owned by ~4 million milk farmers!

2/ The beginnings of Amul's iconic advertising Right from the start, Dr. Varghese Kurien was particular about creating a strong & unique brand identity for Amul. He wasn't a marketing expert, but he knew the importance of branding in building a successful FMCG. (contd.)

So, in 1966, he handed over the advertising to Sylvester da Cunha's ad agency. Cunha & his team conceptualized the iconic Amul girl and the tagline, “Utterly Butterly delicious” for Amul butter. Now, the Amul girl was actually created in response to Polson's mascot! (contd.)

Polson butter at the time was very popular and its mascot was a refined, soft girl. So Cunha & his team conceived the Amul butter girl to be the exact opposite — a mischievous little girl who took a dig at the current events in the country. (contd.)

There were two key aspects to all the Amul girl ads: 1. The ads were timely and connected to the current situation in the country (eg. covering a current event in cricket or politics) 2. There was always tongue-in-cheek humour involved in the ads (contd.)

These ads became wildly popular and the Amul girl has stayed relevant for more than five decades now! 💡 Lesson → Competitors are not a source of sadness. They can push you to bring out the best in you.

3/ So, what is Amul’s SECRET sauce for great advertising? Now, Amul’s success in business & advertising with less than 1% of revenue spend, is almost unreal. In fact, Amul’s 5-year average ad spend is just 0.8% of their revenue! So, how did Amul achieve this feat? (contd.)

Well, Amul does not spend separately to create a brand out of each of its products. Rather, its focus is to buildd an umbrella brand for the company itself i.e. Amul. In advertising, this approach is called umbrella branding or family branding. (contd.)

So, Amul as a brand is synonymous with “Taste of India” and consumers identify every product as coming from Amul. A clear advantage of umbrella branding is that you don't have to spend separately on advertising each product. Which reduces their marketing expense! (contd.)

Other FMCG companies also use umbrella branding! A) Dettol is an umbrella brand by Reckitt Benckiser which consists of products like soap, handwash, etc. B) Nivea is an umbrella brand by the company, Beiersdorf which consists of beauty, skincare & fragrance products.

4/ But, how effective is Amul's family branding approach? Now, of course, Amul has been more successful in generating revenue as a single umbrella brand compared to Dettol and Nivea. So, let's look at some numbers to understand how effective Amul's advertising is! (contd.)

Here we'll take the example of Amul Butter, one of Amul's oldest and popular products. 1. Amul Butter rules more than 85% share of the butter segment in India! 2. The butter market size in India is ~Rs 5400 Cr. So, Amul Butter revenue => Rs 5400 x 85% = Rs 4590 Cr (contd.)

3. Amul's total revenue => Rs 61,000 Cr So, % revenue of Amul Butter = 4590 / 61000 x 100 = ~8% 4. Amul spends ~1% of revenue on advertising. So, Amul’s advertising spend = Rs 61,000 crores x 1% = Rs 610 crores. (contd.)

5. Given Amul Butter gets 8% of revenue for Amul, we will assume the advertising spend for Amul Butter is also 8% of the total. So, Amul Butter’s advertising spends = INR 610 crores x 8% = INR 48.8 crores. But, what's Amul butter's advertising spend for each household? (contd)

First, let’s find out how many households Amul Butter is able to reach with an advertising spend of INR 48.8 crores. 1. Let’s say each household uses four 100-gram packs of Amul Butter in a month. In a year, they will use 12 x 4 = 48 packs. (contd.)

2. So, the yearly spend of a household on Amul Butter is 48 packs x INR 50 = INR 2400. 3. Then, the number of households who buy Amul Butter = Revenue for Amul Butter / Average spend of every household on Amul Butter = INR 4590 crores / INR 2400 = ~2 crore households (contd.)

Finally, the amount spent on advertising by Amul Butter for every household OR customer acquisition cost (CAC) = Advertising spend / Number of households who buy Amul butter = INR 48.8 crores / 2 crore households = ~INR 24 (contd.)

Now, INR 24 seems like a great number for customer acquisition. More so because Amul employs the umbrella branding strategy and if people buy Amul butter, they are likely to trust & buy Amul’s other products as well.

5/ Closing thoughts Amul has clearly aced advertising through the years and has become an iconic brand. You’ll hardly find anyone in India who hasn’t seen the ‘Amul girl’ campaigns. (contd.)

The brand is synonymous with quality & purity and has established an emotional connection with Indian consumers. It’ll be really hard for any organization to beat that!

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Amul is India’s most LOVED brand! It earns INR 61,000 Cr revenue ⇒ 1.2x the combined revenue of Nestle, Britannia, Godrej & Dabur! But advertising spend for, 1. Top FMCG brands: 8-15% of revenue 2. Amul: 1% of revenue 🤯 Learn how to buildd your startup’s brand from Amul 🧵

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AMUL is the long standing FMCG giant in India which made Rs 61,000 Cr ($7.6B) revenue in FY22! But, how did this company achieve this feat by only spending 1% of its sales on advertising. Well, let's...…

How Amul became an advertising ICON despite spending only 1% of sales on ads



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