Amul vs Nandini Issue: When Politics Interrupts Business

Amul is being demonised like the British oppressors it once uprooted from India. #GoBackAmul is trending on the social media platform Twitter.

P.C. Rao, president of the Bruhath Bangalore Hotels Association, an organisation representing over 5000 restaurants, has decided to boycott Amul products across all its members.

In a report to Indian Express, he could be quoted saying, “We are not completely against Amul, but only opposing their move to sell milk and curd products in the Karnataka market, which can threaten our local Nandini brand. Amul already has a big market across India. It is the Association’s social responsibility to protect the interests of the dairy farmers, especially women, by using Nandini’s milk and curd products.”

So, if Amul is the “Taste of India,” then why is Karnataka getting lactose intolerant? Who is Nandini? Why the sudden churn in the pot? Read on and find out.

Amul vs Nandini Row: Meet Nandini Milk

Karnataka Co-operative Milk Producer’s Federation, or KMF, is a cooperative society that works for the benefit of dairy producers in Karnataka. According to KMF’s website, it is the second-largest dairy cooperative in India, and the largest in South India in terms of procurement and sales.

Nandini is the umbrella brand name associated with KMF that covers all the dairy products sold through the 16 milk unions spread across the various districts of Karnataka.

Nandini and KMF recently started making the rounds of various headlines when locals of Karnataka and various politicians alike took to social media to oppose Amul’s footfall in Karnataka.

This opposition, in my opinion, is centred more around sentiments associated with history and does not have a lot to do with the facts of the matter.

Now, before everyone who has their sentiments tied with Nandini tries to chase me down with a pitchfork, calm down, and read on. Nandini stands to benefit in this situation.

Amul vs Nandini Controversy: Bad Bank Balances

To better understand the current situation, you need to know the past. The opposition to Amul’s footfall in Karnataka comes as a result of poor history with a government that originated from the state of Gujarat.

You see, in 2017, a number of Public Sector Banks from Karnataka were made to merge in order to improve the operations of these banks. The banks merged included the State Bank of Mysore, Vijaya Bank, Canara Bank, Syndicate Bank and Corporation Bank.

The intent behind this merger was to strengthen and consolidate the PSBs as well as reduce the Non Performing Assets (NPAs) of the banks. However, the merger of the State Bank of Mysore with SBI led to a a significant part of the employees to be forced to opt for Voluntary Retirement Scheme (VRS).

State Bank of Mysore was one of the five PSBs that were being merged with SBI, causing around 26,000 employees to retire over a period of two years.

Now whether this move meant to improve the banks’ operations or some big evil plan by the ruling government to hurt the residents of Karnataka is anyone’s guess. Hoewever, former Karnataka CM Siddaramaiah played at the strings of the people hearts with the following tweet:

Sure enough, #SaveNandini became a popular hashtag along with #GoBackAmul and Karnataka locals took to the social media platform to boycott Amul entering the state.

Now, the obvious question is…

Is Amul a threat to Nandini?

The very first piece of information presented is that Amul, being the dairy behemoth that it is, could easily burn some reserves to undercut Nandini’s prices and drive its only competitor out of business.

While this threat is legitimate, it is highly unlikely to come to fruition as Amul too is a cooperative organisation, with a majority of its proceeds going to the producers. These primary producers are unlikely to reduce their margins just to gain prominence in a single market. Thus, Amul does not really have much of a wriggle room to create a bargain product.

As a result, the toned milk at ₹54 per litre by Amul is likely to sell more as a premium product in the state, with Nandini’s toned milk at ₹39 is likely to remain a preference for the masses.

Another benefit that Nandini could derive from this whole situation is to spread its own distribution channel like Amul is currently in the process of doing. The low price could actually, under ideal circumstances, help Nandini bring something of a disruption in the dairy industry.

The Bottom Line

It’s quite ironic to see how the masses, stirred emotionally, took up arms against Amul; comparing and shunning Verghese Kurien’s brainchild to the very Britishers that the pioneer helped uproot from India’s dairy businesses.

While large corporations suffocating and running smaller competitors out of business is common parlance in the business world, I suppose we can expect better from the very democratic Amul.

Political sentiments, which have a tendency to murky any and all discussions should be kept aside for once and room should be created for healthy debate. As the situation stands right now, Amul’s entry into Karnataka seems to be receiving a bit of an unnecessarily curdled response.