Danone may apply Bangladesh experience in India

Groupe Danone, the $18-billion French dairy company, is understood to be exploring a strategy for India which will leverage on its experience in Bangladesh.

One of the things Danone is studying is to enter with an affordable initiative, what it internally calls a bottom of the pyramid one. Danone has a joint venture with The Grameen Group in that country, from early 2006, with a focus on easily affordable dairy products.

The Grameen Danone Foods model relies on the creation of independent business and job opportunities in the farming, processing and sales and distribution sectors. To ensure sustainability of the initiative, an emphasis is on providing micro-financing solutions with adequate professional training to local communities that will engage in business with the project.

The equally-held joint venture focuses on providing daily nutrition to low income, nutritionally-deprived populations in Bangladesh and also alleviate poverty through the implementation of a proximity business model. Company officials say the India dairy strategy is in its early days and it will try out its Bangladeshi experience to make a real business model.

These moves are part of Danone’s strategy to increase focus on emerging markets, from which it derives a third of its sales. A decade earlier, Danone realised 90 per cent of its sales in developed countries. Danone is present in four businesses — fresh dairy products, the packaged water market, baby nutrition and medical nutrition. Danone already has an equal joint venture with Yakult Honsha to develop the Indian market for probiotics. This joint venture has invested close to Rs 150 crore for a manufacturing unit and has been increasing its presence in India in the recent past.

Danone is taking these businesses actively after it recently exited a joint venture with Britannia Industries. By exiting the JV, it netted a capital gain of Rs 380 crore when it divested its holding.