Boardroom battle may disrupt marketing of Amul and Sagar brands
NEW DELHI: The boardroom battle in the milk federation that sells Amul and Sagar
brands can disrupt the marketing of the popular dairy products as these
brands are owned by district unions, whose leaders are among the
warring board members.
The Gujarat Cooperative Milk Marketing Federation, whose board voted out chairman Vipul Chaudhary, comprises various milk unions. These include the Mehsana union which is also headed by Chaudhary and owns the Sagar brand.
In 2006, when the federation was gripped by another power struggle, Chaudhary had begun talks to sell his district union's Sagar brand products with Reliance Retail instead of the federation.
Similarly, the Amul brand actually belongs to the Kaira union headed by Ramsinh Parmar, who is supporting Chaudhary. The district unions allow the apex federation to use their brands against a token payment of one rupee per year. The federation has an annual turnover of 13,700 crore. Chaudhary and his supporter Parmar, whose unions account for about one-third of the milk purchased by the federation, walked out of the meeting in which board members voted for the removal of Chaudhary. "Federation directors should understand that it is just a marketing agency and brands Amul and Sagar are owned by two of the district unions. It is mere a licensee to sell our brands," a top source in the federation told ET. He said the issue of brand ownership and its use by the federation did not come up in the stormy meeting on Thursday, but it is inevitable in coming days.
Majority of the federation directors voted for a no-confidence motion against Chaudhary Board members are approaching Gujarat High Court to get its approval to remove Chaudhary who moved his plea through senior counsel Harish Salve in the Supreme Court to challenge the validity of the board meet.
In 1940s, founder Verghese Kurien named the first cooperative dairy Anand Milk Union Limited and its acronym Amul that represented Sanskrit word amulya, means priceless, was used as a brand. Subsequently, he replicated Amul pattern in other districts and local unions processed milk under their own brands. To bring in cohesiveness in marketing, Kurien formed apex marketing body GCMMF in 1973 and decided to make Amul its flagship brand. It also used its largest milk producer Mehsana union's brand Sagar as Amul's sub-brand to offer another price point to customers.
"It is not for the first time that dairy giant is facing such threat. The then federation chairman Kurien who faced a similar threat, but he acted swiftly and got rights for apex marketing body from Anand and Mehsana unions to use their respective brands for token annual royalty of one rupee. However, the agreement is vague when it comes to defining its tenure. In 2006, Chaudhary threatened to walk out of the federation with brand Sagar and even initiated talks with Reliance to set up retail network. But his ambitions to chair federation prevented him from quitting it," said a veteran in the cooperative dairy sector. According to him, it is a crucial moment for Amul and Sagar, which are not commodity brands. "These brands are outcome of a movement against private dairies that were exploiting farmers and consumers. They are symbolic but the trademarks are owned by individual unions and not the marketing body," said the veteran.
A federation executive revealed that Chaudhary earlier demanded specifications of packaging materials and getting it printed on his own. By passing the federation, Mehsana union has also started selling milk powder in open market. "District unions may own the brand but they have been built by federation at a huge investment over the years. It will be a complicated and prolonged legal battle if any of the two unions take this extreme step," the executive told ET.
The Gujarat Cooperative Milk Marketing Federation, whose board voted out chairman Vipul Chaudhary, comprises various milk unions. These include the Mehsana union which is also headed by Chaudhary and owns the Sagar brand.
In 2006, when the federation was gripped by another power struggle, Chaudhary had begun talks to sell his district union's Sagar brand products with Reliance Retail instead of the federation.
Similarly, the Amul brand actually belongs to the Kaira union headed by Ramsinh Parmar, who is supporting Chaudhary. The district unions allow the apex federation to use their brands against a token payment of one rupee per year. The federation has an annual turnover of 13,700 crore. Chaudhary and his supporter Parmar, whose unions account for about one-third of the milk purchased by the federation, walked out of the meeting in which board members voted for the removal of Chaudhary. "Federation directors should understand that it is just a marketing agency and brands Amul and Sagar are owned by two of the district unions. It is mere a licensee to sell our brands," a top source in the federation told ET. He said the issue of brand ownership and its use by the federation did not come up in the stormy meeting on Thursday, but it is inevitable in coming days.
Majority of the federation directors voted for a no-confidence motion against Chaudhary Board members are approaching Gujarat High Court to get its approval to remove Chaudhary who moved his plea through senior counsel Harish Salve in the Supreme Court to challenge the validity of the board meet.
In 1940s, founder Verghese Kurien named the first cooperative dairy Anand Milk Union Limited and its acronym Amul that represented Sanskrit word amulya, means priceless, was used as a brand. Subsequently, he replicated Amul pattern in other districts and local unions processed milk under their own brands. To bring in cohesiveness in marketing, Kurien formed apex marketing body GCMMF in 1973 and decided to make Amul its flagship brand. It also used its largest milk producer Mehsana union's brand Sagar as Amul's sub-brand to offer another price point to customers.
"It is not for the first time that dairy giant is facing such threat. The then federation chairman Kurien who faced a similar threat, but he acted swiftly and got rights for apex marketing body from Anand and Mehsana unions to use their respective brands for token annual royalty of one rupee. However, the agreement is vague when it comes to defining its tenure. In 2006, Chaudhary threatened to walk out of the federation with brand Sagar and even initiated talks with Reliance to set up retail network. But his ambitions to chair federation prevented him from quitting it," said a veteran in the cooperative dairy sector. According to him, it is a crucial moment for Amul and Sagar, which are not commodity brands. "These brands are outcome of a movement against private dairies that were exploiting farmers and consumers. They are symbolic but the trademarks are owned by individual unions and not the marketing body," said the veteran.
A federation executive revealed that Chaudhary earlier demanded specifications of packaging materials and getting it printed on his own. By passing the federation, Mehsana union has also started selling milk powder in open market. "District unions may own the brand but they have been built by federation at a huge investment over the years. It will be a complicated and prolonged legal battle if any of the two unions take this extreme step," the executive told ET.
SARVESH KUMAR SINGH
PGDM 1st SEM
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