Danone adopts urban focus in India

11 July 2011

NEW DELHI: Danone, the French dairy and beverage group, is taking a highly measured approach to expanding its fledgling Indian operations.

Since selling its 25% stake in Britannia, an indigenous packaged food and dairy specialist, during 2009, Danone has been attempting to forge a stronger local status.

This includes forming a joint venture with Yakult, the Japanese firm, to sell enhanced offerings containing probiotic bacteria.

Jochen Ebert, managing director of Danone's Indian unit, suggested that nuanced planning would be essential to ensure long term success.

"India is a new and young market for us. We believe that for India we have to adopt a specific strategy," he told the Economic Times.

Danone intends to emphasise big cities such as Bangalore, Hyderabad, Mumbai and Pune, all of which it has entered in the last year.

This urban-based expansion is likely to be the core model going forward, Ebert revealed.

"We are focused on strengthening our presence in the metros and understand consumers here," he said.

"We are putting massive effort in understanding the consumers, how to strengthen our distribution, building infrastructure and brand[s]," he said.

Currently, the per capita consumption of dairy goods in India stands at 0.5kgs per year, which can be compared with an average of 30kgs in many European nations.

Danone's stable incorporates dahi, a formulation of yoghurt very popular in India, alongside flavoured yoghurts fortified with nutrients, from iron and zinc to vitamin A, for "health-conscious consumers."

"Danone is an experimental company and we are committed to bringing health through food to the largest number of people," Ebert said.

This objective will cover both the positioning of its products and innovation priorities, according to Ebert.

"Danone as a brand strives to provide wholesome and delicious foods that promote a healthy lifestyle," he said.

"Health through food and beverages remains at the heart of Danone's development and has spurred and motivated its ongoing and sizeable investment in R&D."

Among the obstacles to be overcome in India is the nascent stage of market segments such as bottled water, as well as keeping pace with rapidly-changing shopper preferences.

"The categories we have entered are still very small in India and are evolving," Ebert said.

Competition from Indian rivals boasting a more established history is another issue, but Danone believes sufficient space exists for all the major firms.

"India has many players and we would love to grow the market along with them," he said.

"We see immense opportunities to grow the market in India and we are charting out plans for a range of products in the near future."

Ebert also asserted that Danone's unique portfolio should enable it to make progress against domestic opponents.

"Our operations are fundamentally different from the others," he said.

"In the dairy sector, other players are focused heavily on the plain milk business, while our focus is not on plain liquid milk, but on value-added products."

Data sourced from Business Standard, Economic Times; additional content by Warc staff