The 27.3 billion euro French food and beverage major, Danone, is yet again trying to dial up its presence in the Indian market, this time, through its nutrition business. The company’s maiden attempt to spread its wings in India was through a joint venture with Britannia Industries and later through a fully-owned Indian subsidiary which sold value-added dairy products. While its JV with Britannia ended in a bitter legal feud, its dairy business despite its high-quality product portfolio didn’t succeed either and the company eventually exited the dairy business in 2017. However, India, says its Indian origin COO, Vikram Agarwal, can’t be ignored. In an interview with Fortune India, Agarwal talks about Danone’s plans for the Indian market, its learnings from its erstwhile dairy business and much more.
India is a market where nutrition is a huge concern. What kind of opportunities does the Indian market offer Danone?
What we are seeing in India is a major transition of consumers towards healthy food. We find a lot more health consciousness not just in the urban population but also in semi-urban. The consciousness that diet can help them overcome lifestyle diseases is happening at a much greater pace than the rest of the world. If you talk about the industry, the growth rates that you see, the economic boom (the West has been flat for some time now), nobody in the consumer sector is willing to accept anything less that 10%-15% growth. Our business in India is disproportionately small and there is a clear recognition that this is a market we are not participating in. We have the right products and portfolio to participate, but we don’t have the scale. We need to find a way to build scale in India and get into a situation where it is one of the strategic growth bets of Danone. That’s not just because everybody talks about India, but if I just use a detective logic in the Danone context, we are big in the US and in Europe, but it’s all in single-digit growth. If you grow by 3%-4% in these countries then you are considered winners, we are growing in higher single digits in Canada, we have high growth, Africa is also doing well too, but we can’t say that our next $2 billion will come from these countries.
Most global brands have felt the need to localise in India in order to appeal to the consumers. In fact, when you were in the dairy business, you had localised by launching products such as lassi and mishti doi. Are also you planning to localise your nutrition portfolio?
Anybody who wants to operate in India has to Indianise the products. You know we are not new to India and we have localised in this portfolio too. One of our leading brands is Protinex, which is an acquired Indian brand. We acquired it from Wockhardt in 2017, the other brand is Farex, these two are quintessential Indian brands. You can’t succeed in India without developing a product which is suitable for the local nutritional market. The nutritional profile which Indians need is very different from the nutritional profile which Europeans need. The idea is to take global nutritional science and apply it to develop a product which suits the Indian customer.
