Danone Yakult free essay sample

DANONE – FUTURE STRATEGY IN INDIA Background: Danone, a French company, is the world’s sixth largest packaged food company and the world’s leading dairy player. It believes in mergers and acquisitions in order to fuel its geographic and product-line expansion. It has positioned itself as a Health and Wellness company. It operates under four business divisions- †¢Fresh dairy products, †¢baby nutrition †¢water and †¢health nutrition Danone’s brand strategy has been focused on health benefits and convenience. Danone and the Wadia group own equal stakes in Associated Biscuits International Holdings, Britannia’s controlling shareholder. Both companies have been in discussions to untangle differences over issues that range from intellectual property rights(IPR) in Britannia’s popular Tiger brand, a minority stake purchase by Danone in Bangalore-based nutraceuticals firm Avesthagen, and Danone’s application to the Indian government to do business in India on its own. Yakult, a Japanese player, is engaged in the manufacturing and selling of food and beverages, pharmaceuticals and cosmetics. We will write a custom essay sample on Danone Yakult or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It pioneered the concept of probiotics and its probiotic milk called yakult is its flagship product. It aims to provide a healthy life to as many people as possible Danone brought in Yakult. The JV formed is restricted to the Indian market. The main reason for choosing Yakult was their unique product line. The 50-50 JV (equity alliance) was formed between Yakult and Danone in 2005 to manufacture and market probiotic curd in India. Objective: By means of the project, we are trying to pursue the following learning objectives: †¢To diagnose and solve the key issues ingrained in an international joint venture †¢To apply the course takeaways in a practical scenario (the given case) such that the relevance/limitations of stated theories can be understood †¢Formulate a comprehensive case, based on ompany and industry archives, for future analysis Proposed Methodology (Case Structure) Parent Company Situation Danone is a subsidiary of Groupe Danone and marketed as Dannon worldwide. The original company was founded in 1919 by Isaac Carasso in Barcelona and was a small yogurt producing factory. Ten years later, French company came into the existence. Danone is a Fre nch multinational corporation of food products and has the world leadership in fresh dairy products. It also has a leading position in the products like cereals and biscuits. It also has become the leading vendor of packaged water with the market share of 20% in Asia. Danone has grown rapidly over the years through joint ventures, especially in emerging markets. As a result of its strategy of growth, it recently signed joint ventures with various companies like Al Safi in Saudi Arabia, Yakult in India and Vietnam, Alqueria in Colombia, and Mengniu in China. Management model Danone adopts fresh and new prospectives; their fleet of pedal-powered delivery bikes is an example for the same thereby, going beyond a traditional distribution network. This company is characterized by its optimistic, desire to grow and take the lead approach. In spite of its small size, it has grown tremendously over the years with its well-known brands, global development, and continuous innovations. Danone is a ‘glocal’ company, meaning it is both global and local (since its operation is adapted to its local market). Its subsidiaries established in various countries works for local consumers. Danone is visible everywhere in the world but as a local brand. For e. g. , In the US, the company name Danone is not written the same way as in France. Indian Dairy Industry Situation The Indian dairy market grew strongly in 2005-2009 period, reaching double digit rates, as a result of strong sales growth in the cheese category. Gradual deceleration is expected in the forecast period; however, the growth within the market will remain strong. The Indian dairy market generated total revenues of $4. 4 billion in 2009, representing a compound annual growth rate (CAGR) of 11. 9% for the period spanning 2005-2009. Year $ million Rs. million â‚ ¬ million % Growth 2005 2,798. 5 136,705. 1 2,012. 5 2006 2,982. 6 145,701. 2,145. 0 6. 6% 2007 3,174. 5 155,075. 6 2,283. 0 6. 4% 2008 3,851. 6 188,148. 7 2,769. 9 21. 3% 2009 4,388. 0 214,355. 7 3,155. 7 13. 9% CAGR: 2005–09 11. 9% Source: Datamonitor ? Indian Dairy Industry: Segments Category % Share Milk 90. 5% Spreadable fats 3. 7% Yogurt Fromage Frais 3. 6% Cheese 1. 6% Cream 0. 6% Chilled desserts 0. 0% Total 100% Source: Datamonitor Indian Dairy Industry: Key Players Company % Sha re Gujarat Cooperative Milk Marketing Federation 32. 5% Kerala Cooperative Milk Marketing Federation 9. 7% Mother Dairy Fruit Vegetable Pvt. Ltd. 9. 6% Others 48. 1% Total 100% Source: Datamonitor Key Issues faced by company Following are the key decisions Danone has to take in Indian market oTo exit from Associated Biscuits International Holdings, joint venture with the Wadia group oTo enter Indian market with Danone groups products and choose one of the following modes ? To use existing joint venture with Yakult to manufacture and distribute Danone’s own products ? To go alone in Indian market to manufacture and distribute its own products, separately from existing joint venture with Yakult