NEW DELHI: Danone, the dairy group, is setting its sights on India's "base of the pyramid" consumers, an underserved demographic containing more than half a billion people.

The firm has just launched Fundooz, a dairy snack for children fortified with Vitamin A, Iron, Zinc and Iodine, and the first roll out from its Base of Pyramid (BoP) R&D unit.

Eric Soubeiran, director of the organisation's new innovation hub, estimated the audience for low-cost goods - Fundooz is priced at between Rs5 and Rs10 - stands at some 600m people.

"India is to be a beachhead market for us ... The potential is so huge," he told the Economic Times. "Danone BoP's agenda is to develop and market products that will mainly target smaller towns, where disposable incomes are low."

The fact India is also the largest producer of milk worldwide suggests considerable opportunities exist in the dairy category, according to Soubeiran.

Danone spent three years preparing Funbooz, visiting everywhere from schools and research centres to urban and rural communities in a bid to assess shopper needs and logistical challenges.

"We are working differently," said Soubeiran. "From identifying suppliers, to setting up a plant at optimised costs, to understanding what consumers actually want, to patenting the formula - it takes that much time."

The French multinational will test Fundooz in 1,200 outlets in six regions in Northern India, close to its factory in Sonepat, as well as 150 organised retail stores in six cities, and using a series of company-owned carts.

Looking ahead, Danone hopes Fundooz will be available across India by 2015. It is also hoping to introduce one more product at minimum for India's least-wealthy residents in the coming 12 months.

"Developing a strategy for BoP - that's the romantic side. But getting the product to the consumer - that's the real test," said Soubeiran.

"Companies need to develop products with the identified consumer, not for the identified consumer - that's been the stumbling block for many products."

Data sourced from Business Standard; additional content by Warc staff