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Amul to spread bakery business; new plant for cookies on menu


Amul to spread bakery business; new plant for cookies on menu

By Madhvi Sally, ET Bureau | 8 Aug, 2013

Amul plans to expand its fledgling bakery products business and will soon build a plant that can produce 20 tonnes of cookies a day.Amul plans to expand its fledgling bakery products business and will soon build a plant that can produce 20 tonnes of cookies a day.


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NEW DELHI: Amul, the country's biggest dairy brand, plans to expand its fledgling bakery products business and will soon build a plant that can produce 20 tonnes of cookies a day, a top official said.

"We are looking at a 40% annual growth for cookies, buns and bread that accounted for over 20 crore," Rahul Kumar, MD of the 2,800-crore Amul Dairy, told ET. "Unlike other brands which use butter flavour we are using 26% Amul butter in our cookies which consumers will like," he added.

The dairy cooperative has been selling cookies in chocolate, multigrain, butter and coconut varieties for two years in the Anand region catering to neighbouring markets of Ahmedabad and Vadodara in central Gujarat. It currently has a manufacturing capacity of 15-20 tonnes of cookies a month, which it says is not enough to meet demand.

The company will set up an automated plant at Mogar in Anand within a year, Kumar said. "We have received good response and feel that we can capitalise on distribution network of the federation that is experienced dealing with perishable products," he said.

Six months ago, Gujarat Cooperative Milk Marketing Federation (GCMMF) decided to brand and pack cookies attractively for the Anand market.

RS Sodhi, managing director at GCMMF, however, said the cooperative is in no hurry to take its non-dairy business national.

Despite becoming 20-crore portfolio for Amul Dairy, its diversification in cookies is yet to catch the attention of established players such as Parle Products (maker of Hide & Seek and Milano), BritanniaBSE -1.18 % (Good Day) and ITC (Sunfeast).

An executive with a Mumbai-based biscuit maker told ET that he is not aware of Amul's entry into the 500-crore market for cookies. He pegged market for biscuit at 15,000 crore.

BK Rao, group product manager at Parle Products, said if Amul enters the market it will expand the overall segment. "However, if the product is priced at a higher range then acceptance will be more in modern retail and volume sale will be less," he said. Rao said ideally a 80-90 gram pack of cookies should be priced at 10 to make it a mass product.

Cookies offer high margin of 20-30% and the segment has already attracted a number of regional players such as Priya Gold in the North and Bisk Farm in the East.

GCMMF's Sodhi said that even as test trials have been successful, it is too early to go for a national launch. "This segment is very competitive and is a low margin category. One has to put a lot of investment in branding too," he said.

GCMMF Limited, Amul's apex marketing body, earlier test-marketed tea, coffee, snacks and mineral water under different brand names, but could not sustain these product categories.

Nitin Mathur, consumer research analyst at Espirito Santo Securities, said packaged foods as a category was more vulnerable in a slowdown period.

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