New Delhi, September 27, 2024: Food giant Danone SA will be “irrelevant as a global player” if it is not committed to and does not have a strong presence in India, which is fast emerging as one of the world’s largest markets and growth drivers for several consumer goods multinationals, said chief executive Antoine de Saint-Affrique.
“In terms of priority, India is at the very top,” he told ET in an exclusive interview. “If we are not big in India, in 10, 15 or 20 years, we will be irrelevant as a global player. It’s as simple as that.” Danone’s chief said the company’s optimism was based on India’s stable political environment and thrust on infrastructure.
“Not only are we not as big as we should be, but the culture of India, what it can bring, is totally matching the needs of other countries. That (is a) discrepancy I cannot live with for very long. We are working very actively to make India as large as it should be,” said de Saint-Affrique, who is visiting India.
Globally, Danone has four lines of operations—essential dairy items, plant-based products, specialised nutrition and water.
However, in India, the French maker of Activia yoghurt, Aptamil baby food and Evian water has largely focused on the specialised nutrition segment, including Protinex and Dexolac.
After ending its 13-year partnership and legal battle with Nusli Wadia-owned Britannia in 2009, Danone started the nutrition business in India in 2012 through the acquisition of the nutrition portfolio of Wockhardt Group.
It independently entered the Indian dairy market in 2010. However, it was unable to compete with large cooperatives such as Amul and Mother Dairy — which had pricing and sourcing advantages — and exited the business six years ago.
On Wednesday, commerce and industry minister Piyush Goyal said dairy is a sensitive sector and India does not plan to give duty concessions in free trade agreements. Danone, the world’s biggest player in fresh dairy, said it doesn’t want to comment on tariffs in a segment where it currently doesn’t have a presence in India according to the reports published in economictimes.indiatimes.com.
“We do not have fresh dairy in all countries. We will not share any plan in which category we would go. We produce largely in India, for India, and are leveraging our ecosystem in a very systematic way. You see an enormous opening up of India to the world,” said de Saint-Affrique.
In India, Danone competes with Nestlé and Abbott in the baby and adult nutrition segment. The company said it is investing more than 20 million eurosin its factory in Lalru, Punjab for expanding its specialised nutrition business in a market where 23 million babies are born every year and nearly half a billion people are expected to turn 65 years by 2030.
“If you look at what we have, those categories are far from being at the scale of India,” said de Saint-Affrique. “It does not mean that we will not enter other categories at some point. We haven’t even started looking at categories like medical nutrition, where we are one of the world leaders. But there is (still) so much potential in what we (already) have.”
“If you look at the size of my business in Indonesia and China —where we have some of our best people and technology, not only in products but also in terms of logistics in the supply chain—I think India will close the gap there,” he said.
India, the world’s fastest-growing major economy, could see over 500 million people—among the top 40% of the income pyramid—fill their consumption baskets worth $600 billion each year with branded products.
India is already the second-biggest market by revenue for global companies such as Unilever, Diageo and Pernod Ricard.
Danone also wants India to be a source of global talent and innovation. Two years ago, the company roped in Vikram Agarwal as its chief operations officer, the first Indian to join its executive committee. Last year, former Hindustan Unilever managing director Sanjiv Mehta joined Danone’s board of directors.
“India is one of the places where there is the best medicine in the world,” said the CEO. “It’s the place where you probably have the best IT in the world. It is a science and technology-driven market. India should be a source of talent for Danone in the same way as it should be a large market for us. We are going double digits, and we are happy with that, but (it is) not enough.”
De Saint-Affrique, who took the helm in 2021 and has previously worked with Unilever and cocoa processor Barry Callebaut, has served as a reserve naval officer in 1987-88.
