French food major Groupe Danone is now turning to Indian women, rather than relying on its tested global strategies, to crack the competitive Indian market.
According to an interview its top official in India gave to local daily Hindu Business Line, the firm’ s Indian subsidiary is regularly engaging with its key consumers—young, working women—for guidance on product development.
“Young females, housewives and professionals in the age group of 18-29 will be fuelling the growth of packaged yoghurt in the country rather than making it at home,” Jochen Ebert, managing director of Danone Food and Beverages India, told the paper.
Ebert said that this segment was the real source behind the launch of many new, local products, such as stirred dahi (Indian yogurt), mishti doi (fermented sweet yogurt), lassi (yogurt-based drink), and chaas (buttermilk).
“We work like a typical start-up when planning our investments. It varies from product-to-product depending on their success and failure,” said Ebert. “India is a unique country in terms of food habits which tells us that we cannot copy and paste from, say, our portfolio in Europe.”
Ebert stressed that Danone is not a dairy company, but a “dahi” company, adding that Danone’s success ultimately all boils down to growing the per capita consumption of yoghurt or dahi in India.
Pointing out that though its product is expensive, the intent is to offer a product that a consumer will want to buy again.
“Our strategy in India is to grow the per capita consumption of dahi. Today, the per capita consumption of yoghurt is just 3kg, which includes homemade dahi, in comparison to France where the per capita consumption is 30kg. So, India is still in a nascent stage and we believe growing the per capita consumption of yoghurt is the key right now,” he said.
Of the challenges, Ebert said that the Indian retail market is highly fragmented and the modern trade is still at a nascent stage even as strict sourcing requirements make its expansion into fresh dairy products difficult.
Interestingly, it is not only Indian food laws, but also Danone’s own sourcing norms that make it a challenge to use almost 90% of local milk.
Danone follows the direct distribution model, which means it transports products from its factory to kirana stores through its own trucks. However, the company is now also looking to work with distributors provided they follow strict quality requirements.