Danone clubs medical nutrition, dairy units to boost profitability
The maker of Danone yogurts and Farex baby food has moved office to Mumbai from New Delhi 'to create a more inclusive Danone headquarter'
Bengaluru: Danone, the world’s largest yogurt maker, has clubbed its ailing Indian dairy business with its more profitable baby and medical nutrition units to boost profitabililty and improve distribution of its products in Asia’s third largest economy.
The French maker of Danone yogurts and Farex baby food has moved the office of its Indian dairy unit to Mumbai from New Delhi “to create a more inclusive Danone headquarter", the company confirmed in an email.
“The reorganization will help accelerate profitable growth with increased, enhanced synergies (including distribution, operations, and head office synergies) while attracting talent," said Laurent Marcel, who will oversee all of Danone’s operations in India. “The objective is to accelerate growth and simplify structure."
Marcel, who was formerly the general manager of Danone’s nutrition business in India, said the new entity will be known as Danone India Pvt Ltd. Rodrigo Lima, the former head of the medical nutrition business, will now be in charge of baby nutrition as well, while Jochen Ebert will remain general manager for dairy. They will report to Marcel.
Danone’s plan to align the Indian businesses has been underway for more than six months, according to a person familiar with the matter. The move is aimed at attempting to make its dairy business profitable and counter local competition in the ₹ 75,000 crore Indian dairy market.
The move comes at a time when Britannia Industries Ltd is also planning to scale up its dairy business. The company could invest as much as ₹ 300-350 crore—if it goes with a fully integrated model—according to estimates by Britannia, Mint reported on 10 August.
Danone’s dairy business is yet to make a significant dent in the Indian market ruled by local co-operatives such as Amul and Mother Dairy, suggest analysts who track the market.
“For any multinational, food—especially dairy—is by far the most challenging business to be in, because the market is clearly with the local regional brands," said Anand Ramanathan, associate director at consulting firm KPMG Advisory Services.
Danone’s move to combine its Indian businesses comes less than a year after rumours were afloat that the firm would part ways with Narang Beverages, its local partner for selling bottled water brands QUA and B’lu.
Marcel, however, said the company was still in “discussions" with the partner about the future of the business.
The French company has stepped up its focus on Africa and Asia to find new growth drivers outside its home turf.
“It (India) is a key, high potential market for Danone and we will continue our investment in the country," Marcel said.
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