A recent news article describes the growth of Danone India and the progress of its initiative involving low-income segments. Its most recent product launch was a lassi, a low-cost yogurt drink. The company is experimenting with ‘Indovation’ whereby it aims to connect Indian tastes with Danone’s core products and services. In terms of its bottom-of-the-pyramid division, it aims to launch a low-cost yogurt and a milk-based dessert. Though the company plans to operate across India, it is currently only in urban markets. Danone’s mission in India is to distribute healthy products to as many customers as possible.
Danone, the French fresh dairy products giant that is known for its favoured yoghurts in India, this week launched a new product – lassi – its first Indovation (innovation for
Jochen Ebert, managing director Danone India and Bangladesh and head of the global Bottom of Pyramid (BOP) initiative, says business in India across its present markets Mumbai, Pune Hyderabad and Bangalore is growing in triple digits and the company has more to learn from India.
Q: How are you growing in India?
A: We are still a small company in India, which is growing fast. We are growing in the triple digits, which means we are more than doubling every year and again on a much smaller base. We are growing fast and will be bigger soon.
You’ve just launched a new product in India…
It’s lassi that comes in three flavours — mango, masala and sweet lassi — in a beautiful cup of 165 ml and costs `15. We believe this is a segment that will continue on a rapid growth path that we already have in fresh dairy in India. We are selling dahi, flavoured yoghurt, a yoghurt called Cremix and now lassi.
Q: Lassi is a very Indian home-made product. How large is the opportunity in the packaged segment?
A: We see a huge potential in this category as it is not always available in the right quality. We are always very happy if we can operate in the yoghurt category where consumers benefit from bacteria live ferments. This is probably first example of what we call ‘Indovation’, where we try to bridge Indian taste with Danone’s expertise.
Q: How much R&D are you doing for India?
A: The core of our R&D strategy for India is effecting Indianisation. We believe at Danone we will probably be able to learn more from India than India will learn from Danone. There are a lot of potential product categories that are interesting for Danone, which the local R&D team tries and tests continuously. Our local team in India interacts with our global R&D centres in China and France to develop products and we try to adapt as much as possible to Indian taste.
Q: Any examples when you say Danone can learn from India?
A: For me, lassi is the best example. Lassi technically is a yoghurt drink. Danone probably sells yoghurt drink in different forms in 50 countries. What the Indian consumer is telling us is that he is not interested in strawberry, banana or any other yoghurt drinks. What the consumers told us very clearly is that they wanted to have Indian lassi in fantastic quality, available cold and fresh of course. This is where we learn from India to adapt. The masala-flavoured lassi is a very unique product. Mango lassi is a product that you can probably also sell in France, Germany or elsewhere, but the masala lassi is a very unique Indian tasting product. Even our sweet lassi was specifically developed for India where the Indian consumers guided us more than the international business centre.
Q: Will there be any diversification from fresh dairy products going forward?
A: Today in India the focus is on the fresh dairy category. We already have launched in India a product that can be sold out-of-the-fridge called the Danette smoothie, a chocolate product sold in 200 ml tetra pack.
The product is for the Indian teenager and mainly sold in colleges. It is a fantastic recipe innovation. This is another example of where we try to address the Danone global strategy — 99% fresh products in the fridge.
Q: What developments have taken shape with your BOP division?
A: At the moment we have taken BOP to Haryana in the North. Our capability to open a plant in a very short time span of less than a year is a big achievement. We are now since three months in the market; November-February we have had good sales. The first step in the BOP will be to relegate with two products, one is the Rs10 yoghurt and the other is a Rs5 milk-based dessert called Fundooz.
Q: You’re a fairly urban company. Will you look at going rural?
A: The Rs5 product in the North is performing above our expectations. Basically, a Rs5 product can potentially also go to villages. We are a very modest company and not a company globally that has massive expertise in rural networks. I am also handing the Bangladesh operations, managing rural villages in Bangladesh, but it is a learning process. We learn something every month and we are modest enough to say that. Our BOP business in the North is very inspired by Bangladesh.
Q: Is there a need to set up more units in India?
A: India is a big country and if you are selling products that are fresh, you will need to have a certain number of factories. The ambition really is to be a pan-Indian company which can cover everywhere from anywhere. If this takes one year, 10 years or 50, I do not know. Currently, we have a unit in the North and one unit in South that is owned by a company called Dynamix.
Q: Which areas will you invest in?
A: The unique thing in our case is that we invest a lot on quality. In this business there are two elements of quality are important, one is milk quality. We are very obsessed sourcing the right quality milk without adulteration. The other area is supply chain. We are probably the only company in the country that can claim that the yoghurt is not leaving the cool chain as long as our product goes from the factory to the stores at the right temperature.
Q: What are the parent company’s expectations with respect to business in India?
A: The objective is derived from the Danone mission, which is giving health through foods to maximum number of people. Two years ago, we had not touched any Indian customers with our products. Today we have access to close to 100 million Indian consumers. The idea is to be part of the Danone strategy to reach the goal to reach the maximum number of people.