Danone plans to double nutrition biz, line up global products
MUMBAI, Nov 30, 2012 (Menafn - Mint - McClatchy-Tribune Information Services via COMTEX) --French food and nutrition firm Danone SA, which bought the nutrition business of Wockhardt Ltd last year, has set an ambitious goal of doubling its 8% share in India's Rs.2,500-crore baby food market in three years.
The company, which entered India's nutrition market by setting up Nutricia International Pvt. Ltd after acquiring the Wockhardt business, will focus on the child and medical nutrition segments in India.
Nutricia's child nutrition business is initially being driven by long-established former Wockhardt brands Farex, Dexolac and Nusobee, and its medical nutrition arm by another ex-Wockhardt brand Protinex.
"India is a new market for us, but looking at the high potential of this market we strongly believe that target to double the sales in the next three years is quite realistic," said Laurant Marcel, the India managing director of Nutricia.
For this, the company will aggressively expand its market reach by adding another 400-500 people on the field and may also roll out some of the parent's global brands in India, he added. Among Danone's popular global brands are Cow & Gate, Aptamil, Milupa, Nutricia and Dumex.
Danone acquired Wockhardt's nutrition business in August last year for EUR250 million (Rs.1,300 crore then).
The transaction included the Indian company's whole range of nutritional products, around 600 employees and a factory in Punjab.
"It's a beginning for us in this market as the group has been looking for entering India's growing nutrition market either by setting up a new business altogether or by acquiring some established businesses," said Marcel.
Abbott Laboratories, which had previously agreed to buy Wockhardt's nutrition business before calling off the deal, had, in 2009, valued the division at about Rs.620 crore. Danone paid nearly double that.
"Danone's valuation for the business was not only looking at the price of the assets that it had at that point in time, but also the reputation and the potential that its brands held for the future business of Danone in India," said Marcel.
"Compared to the western markets, where Danone is No.1 or 2 in the diary and nutrition market, the emerging markets, including India, are different and tough in terms of regulations and other aspects," said Dariusz Kucz, vice-president, Asia-Pacific region, at Danone's baby nutrition business. "But these markets are growing much faster and is already contributing a significant share to our global turnover."
In India, Danone's main competitor is Nestle India Ltd, which controls almost 90% of the domestic baby food market. "Danone's growth target to double the sales in three years is not unrealistic, but not very easy considering the unique nature of the market where it is often difficult to convince the customer and the endorsing channels to shift to a brand," said an industry analyst with a foreign brokerage, who didn't want to be identified.
Though the potential of the baby nutrition market is attractive because of India's large population and growing income, "it is often difficult for a new player to break the monopoly of established players, though Danone has the advantage here to use the existing channels of Wockhardt to build the business," he added.
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