Danone was incurring losses on its dairy business and could not sustain maintaining its margin.
French foods giant Danone has decided to exit the dairy business in India. The company which entered India in 2010 is rationalising its product portfolio and has discontinued stock keeping units (SKUs), which have been making a minority contribution to its overall business in India that include the UHT (ultra high treatment) and fresh dairy products.
In line with this, Danone’s factory at Rai near Delhi has discontinued production.
Danone under the leadership of its India MD Rodrigo Lima, plans to focus on its nutrition business that it had acquired from Wockhardt in 2012, for about Rs 1,500 crore. In 2015, the company consolidated its India business by merging the two portfolios (dairy and nutrition).
Danone was incurring losses on its dairy business which includes milk, flavoured yogurt, buttermilk, cold coffee, curd and smoothies and could not sustain maintaining its margin. The company was unable to compete with national giants like Amul, Mother Dairy and other regional brands.
In a statement, Danone said it has decided to rationalise its product portfolio in India to allow for accelerated investments and a sharper focus on growing its nutrition portfolio which is more than 90% of the business. The company said Danone has a stated goal to double its nutrition business in India by 2020 in line with its global mission to ‘bring health through food to as many people as possible’ and this renewed focus is key to achieving this goal.
Danone India Spokesperson said “We have great ambitions for our business in India and remain committed to invest and grow in India through well-established brands such as Protinex, Aptamil, Farex, Dexolac and Neocate. In order to maximise growth opportunities, we are continuously analysing our portfolio and sharpening our focus to accelerate investments on the best performing categories and products. For this reason, we will discontinue some of the SKU’s sold in India. Our focus is to bring nutritionally superior and relevant products to India, and 2017 has been a testimony of that with 10 new launches including some from our global portfolio”.