Danone makes return to Indian dairy with US$25mn investment in yoghurt firm Epigamia

By Pearly Neo contact

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Food and beverage giant Danone has re-entered the dairy market in India with a US$25mn (INR1.82bn) investment in local yoghurt company Epigamia, a move that analysts say could ‘lay the path of its revival’ in the country. ©Danone
Food and beverage giant Danone has re-entered the dairy market in India with a US$25mn (INR1.82bn) investment in local yoghurt company Epigamia, a move that analysts say could ‘lay the path of its revival’ in the country. ©Danone

Related tags: Danone, India, Dairy, Investment

Food and beverage giant Danone has re-entered the dairy market in India with a US$25mn (INR1.82bn) investment in local yoghurt company Epigamia, a move that analysts say could ‘lay the path of its revival’ in the country.

“We are convinced of Epigamia’s great growth potential thanks to its unique positioning on the Indian dairy market,”​ said Danone Manifesto Ventures Managing Director Laurent Marcel via the official press release. Danone Manifesto Ventures is Danone’s venture investment arm.

 “As a modern and innovative brand, it appeals to the ever-growing number of Indian consumers looking for healthier options. This investment, our first with Danone Manifesto Ventures in Asia, is a perfect fit, as Epigamia places taste, quality and health at the center of its model.”

Epigamia​ stated in the release that the funding would mostly be utilised in the areas of expansion, logistical advancement and new product development.

“With this new funding round, we intend to expand our distribution across 25 cities in India and expand our range of fresh contemporary products with unique value propositions like high protein, lactose-free, and probiotics,”​ said Epigamia Co-Founder and CEO Rohan Mirchandani.

“We are […] very excited to bring Danone Manifesto Ventures into this partnership. Danone is the global leader in our space and with the support from their venture arm, we expect to execute an ambitious business plan.”

Epigamia Founding Partner Rahul Jain added that: “We have a five-year vision to expand distribution across 50,000 touch points.

“We have been able to create and demonstrate value in managing a cold chain logistics fleet and intend to continue to scale this further as we develop new products.”

Epigamia was launched just some four years back in 2015, but has expanded operations to comprise 21 product options under its Greek Yogurt, Artisanal Curd, Snack Pack, Mishti Doi, and Smoothies offerings.

Its products are available over some 10,000 touch points including modern trade chains, e-commerce platforms, and general trade retailers across the country.

The road to revival?

According to Shagun Sachdeva, GlobalData Consumer Insights Analyst, this move could be a precursor to Danone’s revival in Indian dairy.

“Danone can bank on the Epigamia investment to expand the range of fresh contemporary products with unique value propositions like high protein, lactose-free and probiotics. This allows it to retain its presence in the Indian market and lay the path of its revival in future,”​ she said.

She added that Danone was ‘not quite successful’​ in India, and left the dairy industry in January 2018 after being ‘unable to compete with national giants such as Amul and Mother Dairy’​.

“[As such], for Danone this [investment] is a promising opportunity to partner with a local brand and re-position itself in the sector it left last year.”

Danone’s previous exit from India’s dairy industry

That said, Danone has denied this move to be any sort of resurgence of the company’s previous dairy strategies.

“This is a minority venture investment, so Epigamia will continue to operate independently,” ​Marcel told The Economic Times​, adding that this time round the collaboration would cover brand management, manufacturing, food safety and quality and distribution expansion.

Roughly one year ago, Danone announced its exit from the Indian dairy industry.

According to Bloomberg Quint​, this was because ‘[It] couldn’t build a supply chain and a distribution network to take on entrenched rivals’​, whereas Sachdeva said this was mainly due to its ‘global approach and dependence on capital-intensive strategies to increase sales’

A spokesperson for Danone India said in an official statement then that: “In order to maximise growth opportunities, we are continuously analysing our portfolio and sharpening our focus to accelerate investments on the best performing categories and products.

“For this reason, we will discontinue some of the SKU’s sold in India.”

At the time, Danone India’s dairy portfolio covered flavoured yogurt, lassi, misti doi and milk.

The company stopped operations at its Rai factory in line with this move, but continued its production and manufacturing for the nutrition market.

“We have great ambitions for our business in India and remain committed to invest and grow in India through well-established brands such as Protinex, Aptamil, Farex, Dexolac and Neocate,”​ Danone India added.

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