Danone makes a splash

With sales of B'lue, its ready-to-drink brand, picking up in just four months since its launch, Danone has more than dairy to hedge its India business with

Think Danone, and you are most likely to recall packaged yoghurts, lassi, smoothies and other assorted products in the dairy space. In the last four years, since Danone went solo in India, following its much-publicised split with its erstwhile partner Britannia, the French major has been steadily building its dairy portfolio. Dairy, whose Indian operations are orchestrated from Gurgaon, is a business that gives Danone over 50 per cent of its revenues globally, and remains its key area of operation worldwide, including India.

But away from the epicentre of its action in dairy, Danone, struck up a partnership with the Mumbai-based Narang Group, naming it as Danone Narang Beverages. Quietly the JV developed and then test-marketed a ready-to-drink (RTD) product called B'lue in the city of Pune. This was in 2012.

By March 2013, the product was rolled out nationally, across cities. And now, four months later, the product, billed as a restoration drink that energises as well as quenches thirst, is said to be selling over 100 to 200 bottles per month per store, according to trade sources.

The company refused to verify these figures, which are nowhere comparable to sales figures that colas and packaged water - beverage categories that are large and well-entrenched in India -turn in every month.

However, in RTDs, which is an emerging beverage category in India, pegged at around Rs 2,000-3,000 crore a year, these volumes in the initial months of one's launch are something to reckon with, say the same sources.

Typically, RTDs or functional beverages, in India, include everything from ice tea (such as Nestea, Lipton), coffee, energy drinks (such as Red Bull, Cloud 9, Burn) to flavoured water (such as Catch in the north). The segment of restoration drinks within this space is nascent at the moment, with not too many players.

Apart from Danone, Tata Global Beverages also got into a joint venture with PepsiCo (the foray being called NourishCo) to launch a product called Tata Gluco Plus, positioned as an energiser and a thirst-quencher as well. This product is priced at Rs 7 for a 200-ml pack.

Tarun Arora, country head, Danone Narang Beverages, says his firm worked closely with the global R&D team of Danone to come up with B'lue. "There are iterations of the product in Indonesia and China that have been launched by the company. This product had to be adapted to Indian tastes and conditions for it to work here," he says.

At Rs 30 for half a litre, experts say that B'lue is priced more or less in line with carbonated beverages and fruit drinks packed in plastic bottles of similar size. While glass bottles of Pepsi and Coke are priced between Rs 8 and Rs 10 for 200 ml, plastic bottles for carbonated and non-carbonated beverages, between 400 ml and 600 ml, are priced at Rs 22-30.

By targeting the upper-end in this price-band, experts say that B'lue has avoided being over-priced, and at the same time, ensured margins. Affordibility, says Arora, has been driven with the localised production of B'lue.

But apart from taste, price and localised production, Danone has also worked on the product's packaging to ensure it cuts ice with consumers. Its shape and quality of packaging have improved its chances of being recycled, partly drawing consumers to it, say market experts. "It is an open secret that consumers of beverages packaged in plastic bottles tend to re-utilise the bottles for storing water once they have finished consuming the drink. Also, remember packaged beverages are an impulse purchase. You are thirsty, hence, you want a cool drink. If the packaging appears interesting, it can contribute to its sale at the retail point of sale. Utilising the bottle to store water or any other beverage comes later," says Shripad Nadkarni, director, MarketGate Consulting, who was formerly vice-president, marketing and head of new beverages at Coca-Cola India.

But Arora says that the packaging was carefully formulated, keeping in mind the needs of the consumers.

Dipsticks, he says, have suggested that consumers of B'lue have taken to its packaging.

B'lue is available in modern trade and travel retail channels such as airports, in 35 cities across the country.

Danone, say trade sources, has been working to improve its penetration in traditional trade. "Our endeavour currently is to improve penetration in the cities we are present in," agrees Arora.