Narang sets the ball rolling on JV with Danone

Narang Hospitality, the Mumbai-based importer and distributor of Danone’s premium packaged water brand Evian, has split its business into three verticals, following a joint venture (JV) with the French food major.

Two of the verticals, Danone Narang Beverages and Narang Access, would have investments from Danone, said Rahul Narang, managing director and chief executive officer of Narang Group, which controls Narang Hospitality.

He declined to divulge the quantum of investment and the stakes held by Danone in these two verticals. “It is substantial,” he said. “Danone Narang Beverages will be the manufacturer and brand custodian of Qua and Qua+ beverages. Qua is a natural mineral water brand that we launched last year and Qua+ are functional beverages that we got into subsequently. Both these products have been transferred to the JV now.”

Narang Access, on the other hand, is a sales and distribution venture, where the company will undertake sales and distribution of multiple products, including Evian, Perrier, Orangina, Red Bull, Qua and Qua+, according to Narang.

The third vertical, Narang Connect, is a company owned completely by Narang Group. “Here we undertake sales and distribution of Illy Coffee, Lindt Chocolates and Ronnefeldt Tea, a tea brand from Germany. This vertical is not part of the JV,” said Narang. An e-mail questionnaire sent to Danone elicited no response.

The Danone-Narang venture will be the second after the French food major’s tie-up with Yakult Honsha of Japan a few years ago. The 50:50 JV, called Yakult Danone India, has since launched a probiotic health drink called Yakult. The product is endorsed by Bollywood actress Kajol.

In an earlier interaction with Business Standard, Yakult Danone’s director, commercial, Kenichi Nakane had said the company would launch more products as the category expanded in India.

The probiotic food & beverage market, estimated to be below Rs 100 crore, is growing at a compounded annual growth rate of about 14 per cent, according to analysts.

Nestle, Mother Dairy and Amul are among the key players in this sector. Internationally, the $3.14-billion Japanese major is considered to be strong in the probiotic space, with products ranging from yoghurts to drinks etc.

The $19-billion Groupe Danone also has its own range of probiotic products under the Actimel line. This along with allied dairy products, under brands such as Activia, Danonino and Danacol, makes up 60 per cent of the group’s sales, according to its results for the calendar year 2009. In India, Danone, through its wholly-owned subsidiary Danone India, has so far launched three products, including chocolate smoothies Choco Plus in Hyderabad, plain yogurts Danone Dahi and a range of flavoured yogurts.