Want to start Amul Franchisee?
It must be your dream since the brand name is synonymous with dairy and fun. But looking at the past and experiences of different franchisees, margins and volume seem to be the major issues.
Make an informed decision. Make your plan and select your site wisely.
Understanding Amul’s Franchise Model
Amul operates on a cooperative model, which is crucial to its growth and market dominance. This model ensures fair returns to dairy farmers but also means lower franchise profit margins. While Amul offers a variety of franchise options, including scooping parlours, railway station outlets, and standalone stores, each has a similar earnings structure focused on volume rather than high per-unit profit.
Profit Margins: A Reality Check
Amul’s reputation and strong marketing may draw customers to your outlet, but the profit margins remain modest. Here’s a breakdown:
- Milk is the primary product, with 8-12% profit margins. Milk is a high-demand product, but the margin on each litre is small, so profitability relies on selling in bulk.
- Ice Cream and Other Products: Ice cream yields a slightly higher margin, typically 15-20%. However, the demand for ice cream is often seasonal, which can affect sales.
- Other category items, such as butter, cheese, and chocolates, have similar margins, but quantitative sales are lower in those categories.
The Numbers Game: Volume is Key
The Amul model’s success hinges on achieving high transaction volumes. Sales volume must be consistently high for a franchise to generate substantial returns. For example, a standard Amul outlet might see monthly revenue between Rs. 5-10 lakhs. Still, after accounting for costs, rent, staff, and product purchases, the net profit may be smaller than expected.
Amul’s competitive positioning also affects margins. As a cooperative brand, Amul keeps its prices reasonable to reach every household.
Amul’s competitive pricing structure gives less room for higher markup.
Making it challenging for franchisees to drive sales and profits without huge footfall.
Consider the Investment Costs
Setting up an Amul franchise requires investment beyond the initial fees. Here’s what to expect:
- Franchise Deposit: Depending on the outlet type, the deposit can range from Rs. 25,000 for a primary outlet to Rs. 1,00,000 for higher-traffic locations like railway stations.
- Store Setup and Equipment: It’s totally dependent upon the concept we choose: kiosk, parlour, store, with basic interiors, signage, and refrigeration. Additional footfall expectations, too, will lead to a cost increase for infra.
- Rental Costs and Other Overheads: Prime high-footfall or high-customer-traffic areas come with high-cost rentals, staff, and other overhead.
Competition: Amul vs Other Dairy Brands
India is an agricultural country; the dairy industry is very competitive.
It’s very much regulated.
having big brands like
Nandini
Nestle
Parag
Havmore
Dynamix
are vital players in various segments
While Amul is the market leader, the competition in niche products or regional markets adds pressure on franchisees to sell large quantities at Amul’s competitive prices.
When Amul Might Be a Good Fit for You
Amul franchises can work well for those with high-traffic locations, such as near busy markets, schools, or residential complexes. Suppose you own a store with established foot traffic or have reliable customer flow. In that case, Amul can be a profitable addition to your business.
You need more than just walk-ins or local demand. Depending on volume, cost, and profit, work out a match.
Make a foolproof plan.
Final Thoughts: Is an Amul Franchise Right for You?
If you’re considering an Amul franchise solely based on the brand’s popularity, take a moment to evaluate your business location and customer base. Amul’s profit structure is about volume, so places with high footfall are crucial. Commitment to the Amul franchisee business is most important since the margins are very low.
There are various full-fledged store models, like “Naturals,” which Amul has launched. See the margins, projections, and plan.
To summarise, Amul franchisee can be rewarding if you plan and execute well.
Make informed decisions.
