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The milky way

How Danone is differentiating itself in the Indian dairy market

Vishal Koul

Devendra Shah was at his dairy plant in early 2007 when he was informed that an executive from Danone India wanted to speak with him. Intrigued at what a competitor could possibly want, Shah — chairman of the ₹880-crore Parag Milk Foods — answered the phone and was taken aback when asked whether senior officials from the world’s biggest yogurt maker could call on him. He said yes, and a couple of days later, two top Danone executives made the trip to Manchar, 60 km from Pune. They spent the better part of the day at the facility that houses India’s largest cow farm and Asia’s biggest cheese factory but their focus wasn’t on milk or cheese. “The conversation was about what Danone could do with the yogurt market in India,” recalls Shah. 

If he was surprised at being asked for advice from a rival, Shah saw that as no reason to hold back, especially since his brands (Go and Gowardhan) were yet to launch flavoured yogurt. “I told them it was important to sell yogurt the way they would sell ice cream — the consumer should have to use a spoon.” Unlike in Europe, where yogurt drinks are immensely popular, in India, points out Shah, “yogurt needs to be scooped with a spoon”. 

It’s not known whether the Danone executives took Shah’s word to heart but when the French company launched its yogurt in India, it was in a cup, to be eaten with a spoon. The other, drinkable yogurt-based products — lassi and smoothies — followed only later. 

In the three years since its launch, Danone India has expanded its portfolio pretty rapidly, in keeping with the way most multinationals in India do business. The company now has five products (with multiple flavours) in the milk and yogurt space, and operates in a ₹2,513.5-crore segment of the ₹33,200 crore organised dairy market (see: Crème de la crème). And even as growth in Danone’s home region of Europe is weakening, Euromonitor predicts that 95% of the global dairy market’s growth from 2011 to 2016 will come from emerging markets. So, India is clearly important to the €21-billion foods major — in fact, it has a presence in the country across all four of its business streams, from water and fresh dairy products, to baby nutrition and medical nutrition. 


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