The French Indovation

Can Danone milk the Indian market?

With all the harrowing stories of drought and starvation one hears everyday, this fact may be a little hard to swallow: India is the world’s largest producer of milk. And consumption, too, is rising steadily.

You don’t need to search too hard for the companies that seem best poised to take advantage of this direct consequence of growing prosperity and rising disposable incomes. The dairy co-operatives led by Amul, and Nestlé have spent decades nurturing the market, growing their distribution and brand presence across the length and breadth of the country. 

Now, that space is readying to boil over, with several small and big players eyeing the dairy market seriously. Among the new entrants, the one that stands out is Danone — it is taking baby steps towards becoming a milk products major. Really tiny steps:  after three years in the country, Danone India has a grand total of five products available in five cities across India. But what sets the French company apart is that it has led its entry with very successful local innovation — or Indovation  — such as lassi in ready-to-go glasses, in an all-Indian, masala flavour. Clearly, Danone sees this as a market where the cream is yet to rise. But can Danone really make a big leap in a market that is becoming increasingly competitive? Read our cover story: The milky way

Our big story this issue is on private labels. Store brands were supposed to be the next big thing as Indian retailers sought to maximise margins and build loyalty by offering substitutes for manufacturer brands. And the opening of retail to FDI was to have led to explosive growth in the category. But the fact that  modern retail has still not gathered scale and stature in India means private labels have a long way to go before they become brands in their own right: No room for Store Brands.