Danone_in_south_east_asia
Upcoming SlideShare
Loading in...5
×
 

Danone_in_south_east_asia

on

  • 5,847 views

Master AINI 2010

Master AINI 2010

Statistics

Views

Total Views
5,847
Views on SlideShare
5,815
Embed Views
32

Actions

Likes
2
Downloads
159
Comments
0

1 Embed 32

http://casesinmarketing.blogspot.com 32

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

CC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike LicenseCC Attribution-NonCommercial-ShareAlike License

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Danone_in_south_east_asia Danone_in_south_east_asia Document Transcript

    • Master AINI : Marketing M. Bennavent Danone dairy products : a wellorganized implementation in South Eastern Asia Study of Bangladesh, Thailand and India Juliette CAMUS Charlotte DANDO Rym OUARTSI
    • Summary INTRODUCTION ............................................................................................................................. 3 I. A new way of consuming: the probiotics ............................................................................ 3 1. Food culture: a comparison between South East Asia and Western Europe ................. 3 2. The probiotics market in South Eastern Asia and Europe ............................................... 3 3. Danone global strategy: a focus on health concerns ...................................................... 5 II. Danone in South Eastern Asia: strategies based on partnership ........................................ 8 1. Bangladesh : a social business ......................................................................................... 8 2. Thailand: a strategic alliance ........................................................................................... 9 3. India: a joint-venture ..................................................................................................... 10 1. Danone legitimacy in South Eastern Asia .......................................................................... 12 4 P’s study ................................................................................................................................... 12 2. Figures and forecasts..................................................................................................... 13 3. Food Value in Asia ......................................................................................................... 15 4. Balances ......................................................................................................................... 16 CONCLUSION............................................................................................................................... 16 2
    • INTRODUCTION Danone Group is one of the leading companies in dairy products and it has known a fastgrowth and expansion during the last ten years. Danone developed these last years astrategy of products towards healthy food and aims to become a global leader in this field. We’ll study in this report the marketing strategy of Danone to penetrate South East Asiancountries; thru the study of three countries; India, Thailand and Bangladesh; the productsand to get a global view of the strategy of Danone to introduce on new markets productsalready manufactured and consumed in Western countries where Danone Group has alreadygained shares of the market . I. A new way of consuming: the probiotics 1. Food culture in South East Asia In South East Asian countries food is not seen only as a nutriment but also as a source ofenergy that can prevent from diseases or cure. Food is above all characterized by anassemblage of plants and animals. Food is not seen just to feed but also medicine plants areused in meals and the selection of the right food at any particular time must also bedependent upon ones health condition at that time. It is believed as in Western countriesthat some food diets are disease preventive. In this perspective we can see how Danone thruits health oriented products aim to get introduced on the asian market, highlighting thebenefits taken from consuming dairy products. 2. The probiotics market in South East Asia and Europe  Presentation Food and Agriculture Organization (FAO) of the United Nations defined probiotics as “livemicroorganisms, which when administered in adequate amounts confer a health benefit onthe host”. Extensive researches highlighted the benefits of these products on prevention andcure of certain diseases, such as inflammatory bowel disease, lactose intolerance. Itsavailability in the form of food and dietary supplements like dairy products and bakedproducts has increased its consumption among the health-conscious population. 3
    • Since a decade, probiotics are “fashionable”. Many studies and reports analyze theinfluence of those products in a global way. The highest number of products innovations hasoccurred in the field of probiotic functional foods and beverages: in the past decade, morethan 500 produts of this category has been introduced. Probiotics are also integrated onpresents products such as sausages, muffins, cheese, chocolates… A report untitled Probiotic Market- Advanced Technologies and Global Market (2009 -2014) and made by the agency markets and Markets estimates and forecasts this globalprobiotics market. It divided its report on different part: - Products: Functional foods and beverages - dairy products, non dairy beverages, breakfast cereal, baked goods, fermented meat products, dry-food probiotics; animal feed probiotics; dietary supplements - food supplements, nutritional supplements and specialty nutrient. - Applications: Human application- regular consumption, probiotic therapy, prevention of diseases and probiotic application for animals. - Ingredients: Bacteria in probiotic foods - lactobacilli, bifidobacteria, bacillus coagulant; yeast and others.  A growing market in Asia and Europe According to this study, the probiotics market is a growing one: it could reach 32.1 billiondollars in 2014, with a growth of 11.7% from 2009 to 2011. The European Union is the firstconsumer of these products with 42% of the market, followed by Asia (30%). In Europe, the baby-boomer population is really interested in probiotics and in itshealthy benefits. In South Eastern Asia, this is the emerging urban middle class which isreally seduced by these products. Their characteristics correspond totally with the way offeeding of Asiatic people. With a 1.2 billion people market in India, this is a growing market.For example, India’s probiotics market has been highlighted by researcher Frost & Sullivan asa “major growth market of the future”, with annual growth of 22.6 per cent until 2015. Theyforecast that the Indian probiotics market could quadruple by 2015.  A market specialized in dairy products 4
    • The dairy products correspond to 70% of the probiotics market share, and they are themost sold in Europe. However, in South Eastern Asia, Probiotic supplements account for 49%of sales with foods and beverage at only 4%. Particularly in India, the presence of majorprobiotics suppliers and products makers such as Danisco, Chr Hansen, Yakult and Danone isaccelerating growth in probiotics dairy products. Yakult Danone India’s Kiyoshi Oike said inSeptember 2009 that “though the market for probiotic foods in India is still at a nascentstage, as pioneers and global leaders in this category we will play a major role in developingthe probiotics food market in India”. 3. Danone global strategy: a focus on health concerns a. Danone health concerns strategy The CEO of Danone, Franck Riboud has decided to change the Danone strategy : until2006, the strategy was focused on well-being. Now, Danone strategy is focused on healthconcerns. However, for Danone health has always been an overriding concern: Danone health concerns • 1789 : discovery of Evian mineral water’s benefits • 1886 : 1st biscuit Lu, with cereals • 1919 : 1st yoghourts Danone sold excusively in pharmacies • 1964 : 1st fresh cheeses 0% fat content • 1996 : refocusing on 3 points based on nutrition and health concerns One year after the group’s decision to focus exclusively on health and the introduction ofthe new business lines, Danone had to accept additional responsibility with respect to healthgovernance. This strategy to focus on health concerns is totally applied by Danone in South Asia: - In Bangladesh, thanks to Shotki Doi yoghurts : its objective is to fulfill nutritional needs to young and poor people - In Thailand, thanks to products under the Activia brand: Danonino, to promote growth in children; Actimel, to boost the bodys natural defenses; Activia, to aid digestion; and Vitalinea, to manage weight. - In India, thanks to the Yakult Yoghurt, this is a probiotic. 5
    • All the star products sold in South East Asia are products with health concerns. Thisstrategy corresponds totally to the global Danone Strategy, which is a principle of healthgovernance. b. Health concerns in Asia By setting up in South Eastern Asia, Danone has launched 3 main products: - In Bangladesh: the Shotki Doi yoghurt - In Thailand: the Activia brand - In India: the Yakult yoghurt  Shotki doi in Bangladesh The product launched by Danone in Bangladesh is a yoghurt called “Shotki Doi” (“yoghurtto give strength”). It was specially developed to fulfill the nutritional needs of children inBangladesh. It is made with cow milk, date molasses and sugar. A single 60g cup provides30% of a child’s daily requirements of vitamin A, iron, zinc and Iodine. The initial Shotki recipe was not sweet enough for Bangladeshi taste. Therefore, it wasmade sweetest. Range of products in 2009: - Shokti Doi 4 cups: plain yoghurt: 60g – 6tk; 80g – 12tk - Mango yoghurt: 60g – 7tk; 80g – 12tk;  Activia in Thailand In Thailand, the main products launched by Danone have different names, in order tocreate separate market positions. All these products are probiotics, with healthy benefits: - Danonino: to promote growth in children; 6
    • - Actimel: to boost the bodys natural defenses - Activia: to aid digestion; and - Vitalinea: to manage weight. Danone has also created a website for Activia with frequently asked questions regardingthe benefits of consuming Activia on health, digestion and even allowing to use weight.  Yakult yogurt Launched at the end of 2007, the Yakult yogurt is not totally new. Actually, it exists since a long time in Japan, Yakult Honsha’s original country. All studies about the product had been ever done and the scientific evidence of the yogurt quality was already proved. In Japan, Yakult yogurt is recognized as a FOSHU (Food for Specified Health Uses) product, by the Ministry of Health, Labour and Welfare. In France, we can find this product under the name of Actimel, aproduct made by Danone France. The composition of Yakult yogurt is the same: 6,5 billiongood bacteria are included in 65 ml of a yogurt bottle. This bacterium is called Lactobacilluscasei.  Balance Danone has jumped into the bandwagon of probiotics, with the same strategy in SouthEast Asia: it has launched probiotics yoghurts in the 3 countries concerned (Bangladesh,Thailand and India). However, the implementation strategies were quite different in thoseareas. 7
    • II. Danone in South Eastern Asia: strategies based on partnership 1. Bangladesh : a social business  History of the project This enterprise is a social business project, created by a joint-venture between theGrameen Group and Danone Group in Bangladesh. In 2005, Franck Riboud, Chairman and CEO of Group Danone and Muhammad Yunus,funder of Microcredit met in Paris and decided to establish a partnership. In March 2006,they created the Grameen Danone Foods Ltd (GDFL) based in Bangladesh. This project is the first investment supported by “Danone communities”, an investmentfund created to support businesses that aim to be sustainable, with social and societalobjectives. Between 2007 and 2008, first adaptations to the product were made and the year 2008suffered from a crisis with the increase of raw materials’ prices. Today, after having resolvingthis crisis, the main objective of the GDFL is to expand the project.  Project The project was creating a yoghourt helping to fulfill the nutritional needs of children. Inthis way, a plant was set up near Dhaka in Bogra, and as a social business, uses only locallyavailable ingredients in order to reduce the costs and the consumption of energies, andpromote local communities development. The Grameen Danone factory’s yearly capacity is3000 tons. In may 2009, only 25% of the capacity of the plant was used. It has beendesigned to rely on local labor rather than sophisticated machinery, avoiding expansivemaintenance problems and allowing poor and uneducated people working in: 40 jobs wascreated thanks to this plant. In addition to the social way, the plant is environmentallyfriendly: it is partially sourced with solar energy, collecting rain water…  Strategy GDFL’s mission is “to reduce poverty by a unique proximity business model that willprovide daily healthy nutrition to the poor of Bangladesh”. According to Danone Group,there are 4 main objectives: - To bring health through nutrition at very affordable price for all Bangladeshi children 8
    • - To improve living conditions of the poorest of the community by involving them in all stages of the business model - To preserve non-renewable resources as much as possible - To be profitable to ensure economic sustainability Professor Muhammad Yunus explains that “this is a unique opportunity to create abusiness totally dedicated to social objectives, a company whose ambition is not to generateprofits for its investors, but committed to serve the interests of people without incurringlosses”. Franck Riboud said “I am utterly convinced that our future depends on our ability toexplore and invent new businesses and new types of enterprises”… “a great opportunity tomake progress in that direction and take another huge step towards fulfilling our mission: tobring health through food to as many people as possible”. This strategy corresponds with the will of the Group Danone to specialize itself inprobiotic products (decision taken by Franck Riboud in 2007). 2. Thailand: a strategic alliance  Project On 25th January 2007, Danone has announced plans to work alongside a local counterpart Dutch Mill Co. to distribute and manufacture a range of fresh dairy products within Thailand. Dutch Mill Co., Ltd. is one of Thailands largest manufacturers and marketers of dairy products. The company has such products as UHT yoghurt drink, UHT fresh milk and ice lolly. Dutch Mill employs a total of 1,300 employees .Its market is in East and Southeast Asia.  Strategy The groups decision to form a strategic alliance with Dutch Mill marks the growingimportance of the countrys dairy sector to processors and packagers. Danones operations iskeen to increase its presence in the region through the growing market for health orientateddairy products in Thailand. According to the company, consumption in Thailand alone for fresh dairy products isaround 4 kilos a year in average per capita consumption. This figure according to predictions 9
    • made last year by Kasikorn Research Center, will continue to rise due to growing demand inthe country for healthier products. The group added that niche categories like the ready-to-drink yoghurt were expected todrive growth in Thailands yoghurt sector by 15-20 per cent per year. It added that otherspecialty products including high-calcium milk are also expected to grow in popularity. Danone argues that establishing itself with a company that already boasts a number ofpopular brands in the country, like Dutch Mill, will allow it to better adapt to challengeswithin the market. As such, through its new local arm, Danone Dairy Thailand, the companywill combine its own technical and marketing resources with Dutch Mills distribution andproduction capabilities. Yol Phokasub, Chief Operating Officer of Dutch Mill Co., believes thatthe partnership will benefit both companies operations in the country. "Thanks to Danonestechnical and R&D capabilities, we expect to shorten the time-to-market for value addedproducts and thus contribute positively to improve the Thai dairy industry". 3. India: a joint-venture  Project Danone is one of the main leaders in the yogurt sector in the world. Its presence in majorpowerful countries in Asia, as China with its partner Wahaha, reinforces its presencelegitimacy in South Asia. Among several other countries, Danone wanted to be active on theyogurt Indian market, recently awake. Weakened by disagreements with Wadia Group inIndia, Danone found some new partners to emphasize its presence on the yogurt Indianmarket. In December 2007, Danone started a new joint-venture with Yakult Honsha, a Japanesecompany leader in probiotic products. Together, they set up a 50/50 joint venture calledYaktult Danone India (YDI) to launch a new product on the yogurt market. In April 2009, Danone put an end to its joint-venture with Wadia Group caused by adiscrepancy related to a will from Danone to start the Yakult joint venture. This action hasbeen done without the Wadia’s agreement and not legally allowed in India. This lastexperience in India did not help Danone to start its new experience and, in the same way, tosave its image. 10
    • The reason why Danone France built this joint venture with Yakult is very obvious. Yakultis considered in India, and widely, in Asia, as a pioneer in probiotic products. Yakult’sreputation was already made and helped Danone to build its own one. A lonely arrival ontothe market without any joint venture would have been risky as Danone was unknown in thispart of the world.  Strategy The YDI’s strategy is totally new in India. As in Bangladesh, a strategy based on socialand health is launched. The goal is to promote health by the way of a dairy product. The cowstatus gave a significant advantage to YDI: all cow productions are considered in India as aholy gift from their god powers. Therefore, milk is naturally viewed as a health and purepiece of food. But this data also has a drawback: giving its holy position, milk is a drinkdedicated to rich people and higher casts in India. Probiotic products are very new in India. YDI is a pioneer on the market. Theseproducts contain live micro organisms helping digestion and preventing from diseases. Thisargument is very significant for probiotics sales. YDI plays on this argument to differentiateits product from competitor’s products.  BalanceThe whole strategy of Danone is based on partnership in South Eastern Asia. Even if thereare strong differences on the way the partnership is making ( a social business in Bangladesh,a strategic alliance in Thailand or a joint-venture in India), Danone wanted to be cautious byentering the South Eastern market with a partner who well known this big and growingmarket, full of opportunities. 11
    • 1. Danone legitimacy in South Eastern Asia 4 P’s study Product Price Promotion Place Shotki Doi : a - Little shops - Mini events yoghurt to fulfil (and now Cheap : less - Nutritional nutritional bigger ones)Bangladesh tahn 0,05€ information needs of - Door to - TV advert children door campaign super markets Activia: a in malls and Local website giving probiotic to middle big cities, 7- Thailand health advises improve transit range:0,35€ 11 super markets - Ambassador Yakult : a Middle and : Indian Yakult Ladies probiotic upper range :10 actress Kajol India (door-to-door) yogurt rupee for 1 - Yakult ladies bottle (0,15€) - Adverstising in magazines 12
    • 2. Figures and forecastsa. Bangladesh  figures  Forecasts GDFL FINANCIALPROJECTIONS P&L 2007 2008 2009 2010 2011 2012 Actual Actual Budget Forecast Projections Projections Plants 1 1 1 1 2 2 VOLUME (TNS) 76 149 500 1 500 4 500 6 000 Net Sales (CANN) 4 268 10 455 41 566 124 500 373 500 498 000 CANN / Kilo (TK) 56,2 70,2 83,1 83,0 83,0 83,0 5 635 12 353 19 047 23 955 40 500 62 000 Operating Profit (ROP) (16 797) (20 953) (23 312) (15 372) 22 139 35 500 ROP % (394) (200) (56) (12) 6 7 Free Cash Flows (72 101) (15 292) (38 148) (99 672) 22 639 40 500 13
    • b. Thailand  ForecastsThailand is the most developed countries between the two other ones. It enjoyed a GDPgrowth by 2.6% in 2008 and by 1.6% in 2009, despite of the global crisis. Moreover, Thais arenow focused on their health, particularly in middle and upper classes. This way of thinking isspecial to Asia: a well-being attitude is part of culture and this is one of the strengths ofDanone for the future. Milk consumption is rather new for this population and a range ofproducts could appear within next years.More than that, Danone wants to use Thailand as a base country to export its products allover Asia. Because the industry is well-adapted to produce dairy products, Danone choseThailand: the work force is still affordable and transport costs are low. In the meantime,Thailand is a good test country to assess opportunities in other Asian markets. c. India  Figures : Dairy product sales from January to June 2009 Sales quantity Country (thousands of Year on Year (%) Started business bottles/day) India 9 204,6 Jan 2008  Forecasts Forecasts for the next years to 2011 are very positive. Milk consumption will increase by200% according to milk specialists which a good news regarding Danone position in India.Moreover, we know that Asian people need milk consumption to avoid intestinal diseases, aplague in this region, named irritable bowel syndrome. All these factors led to Indians to focus on their well-being. A strong will of health careincreases in India, especially in the upper and middle classes. In the same time, middle class 14
    • in growing, due to an elevation of standard of living, which will increase market shares formilk products. 3. Food Value in Asia For the three countries studied in this case, the food value is very essential. Thedifference between the European culture and the Asian culture on this point is strongenough. In Europe, food is a way to feed and to satisfy ourselves. We also use food to create asocial and/or a professional link between people. Food is also considered as a pleasure aswell as a need. In Asian countries, food is more than that. Over all, food is a way to cure people. It isconsidered as well as a med and that is why people have a great respect towards food. Theycook in a very ritual way and the meal time is a holly moment. This vision is not as wrong as we can imagine. Numerous foodstuffs in Asian countrieshave effective impacts on health. For example, the use of spices has a great effect on peoplehealth and protects Asians from some diseases as liver deficiency or memory problems. In Bengladesh, food is very precious and rare. People care a lot about it and payattention to what they eat. The actual poverty in the country leads Bangladeshis to eat badquality food. The presence of a group as Danone is considered as a real chance andattending this kind of project could be a good way to teach people how to run foodproduction and in this case, yogurts. As well as a healthy product, the Danone presence is achance for the poorest people in Bangladesh. In India, food is a cure before a need to feed itself. The real aspect of the food is togather families. The use of fingers to eat is also one of the major points of their habits andwe can bring this habit together with our way of taking our meds: the gesture is the same.Concerning yogurts, milk is considered a holly product and is totally taken for a med byIndians. 15
    • In Thailand, food, and especially milk, is vey essential. As the most developed countriesregarding the two other ones, Thais are more aware of food nutritional supply and use it as aneed and less for a cure. Governmental programs have been created to encourage people toeat well and have a strong power on population. 4. Balances Between Thailand, India and Bangladesh, we can analyze that most of cultural points aresimilar. Their values regarding food and health care in general are nearly the same. Theirmilk consumption need is significant as their basic food culture is more founded on riceconsumption and spices, which are also essential for heath. They all give in their culture ahealthy way to food as a cure element, a very different conception regarding the Europeanculture. As their standard of living is not as high as in European countries, except from Thailand,food is precious and need care. Milk also comes from cows, a symbolic animal in India andBangladesh. Taking care of this product is natural. The three products launched in these countries know a great success because theirmarketing strategies were well-adapted to the cultural dimension of each of them. Joint-venture for India, social project for Bangladesh and a strategic alliance for Thailand helped inthis way to put ahead Danone’s products.CONCLUSION Introducing a global brand in a new market requires a global strategy. Even if the ways of introducing a product were different in these countries they all followed the same principles, get to know the market, get a local partner and adapt to local tastes. With this strategy Danone aims to introduce new products and expand its presence in South East Asia taking profit from previous experiences. 16