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Soon Amul's shrikhand will see some competition from unlikely quarters. French dairy major Danone is developing an India-centric portfolio to make a mark in the complex dairy market. Having launched quintessential desi products like lassi (sweet yogurt drink), dahi (yogurt) and chaas (spiced buttermilk) recently, the company is looking at products like shrikhand. With a host of foreign dairy players such as Lactalis and Bongrain setting sight on the world's largest milk-producing nation, Danone, which entered in 2008 (at first, in a JV, and then solo), is trying to stay ahead of the pack.
"We want to establish Danone as the most-preferred premium dairy brand. Hence expanding into local segments is important," Jochen Ebert, managing director, Danone Dairy, Danone Foods & Beverages India, says, adding that its chaas, lassi and mishti doi (sweet yogurt) have earned a positive response.
Brand experts feel that Danone is taking what is called the classic 'toe-hold' approach. "You first bring products from overseas, and eventually develop products that cater to local taste. It boosts visibility and reach, but not necessarily margins," explains Harish Bijoor, chief executive of Harish Bijoor Consults.
The yogurt specialist is trying its hands at all things fermented. Having launched mishti doi, a version of yogurt popular in eastern India, the company is now exploring another local yogurt variant, shrikhand, that is popular in western India. "We are very open to look at more local products," Ebert explains.
He adds, "India potentially is a very big market and it is the biggest producer and consumer of milk. However, the per-capita-consumption of yogurts is still lower than in Europe or the US. Including home-made dahi, it is about 1/10th of more mature dairy markets like France. If we consider only packaged yogurts, this drops to about 1/100th. So, there is scope."
Even arch rival, Gujarat Cooperative Milk Marketing Federation (GCMMF) which markets dairy products under the popular Amul, says that there is a shift towards dairy products from the organised sector. R S Sodhi, managing director of GCMMF says, "Consumers are preferring products from the organised sector."
Bijoor says, "There is scope for branded curd and lassi. Packaged formats is definitely gaining popularity as 'loose' is no longer considered as wholesome."
Danone has refreshed its communication too, displaying new energy through social network (taglines like When in 'Doubt, Drink more Lassi' or 'Keep Calm, Eat Aam' on Facebook) or by signing a brand ambassador (Karishma Kapoor).
"Of the top 20 dairy companies in the world, seven have already set foot in India in some way or the other. Many others are assessing the market, considering options to enter, although the market here is very complex," says Shiva Mudgil, assistant vice-president (food and agribusiness research and advisory), at Rabobank. Rabobank expects value-added dairy products such to grow at 20-30 per cent in the next four-five years.
The world's largest dairy Le Groupe Lactalis, for example, has set foot in India. In January this year, Lactalis had acquired South-India-based private player Tirumala Milk Products for about Rs 1,750 crore. Lactalis develops well-known international brands such as President, Galbani and Parmalat and is head-quartered in Danone's homeland France. Nestle already retails its dairy products. The others making inroads include Bongrain and Schreiber.
An Euromonitor report on the dairy sector says, "Sour milk drinks and flavoured spoonable yogurt are likely to emerge as preferred snacks among health-conscious consumers. The trend would be supported by the increased visibility of yogurt and sour milk drinks in modern retail stores. Additionally, many manufacturers are likely to make an entry into yogurt and sour milk drinks to tap into the growing consumption."
Industry insiders says that Danone's local turn will open doors to the volume segment. A Mumbai-based analyst says, "Danone has to make a choice between high-margin foreign products and local tastes." Danone has launched creamy yogurt Cremix and Danette smoothies, apart from flavoured yogurts.
The company is also expanding reach: "Today we have presence in five cities, Delhi-NCR, Mumbai, Pune, Bangalore and Hyderabad, in all modern trade stores. In traditional trade, we focus on the upper-end of the market where we can fully control cold chain and product quality. In the beginning of next year, we will start to expand," Ebert says.
Market-leader Amul, is not yet worried. Sodhi says, "We not only have a pan-India presence but enjoy a high market share. In branded lassis, Amul has more than 90 per cent share. Danone still has limited distribution reach." Bijoor adds that distribution would unlock further gains for the brand.
