The parallels between French food multinational Danone S.A. and New Zealand-based dairy cooperative Fonterra are striking. Both are leading players globally in dairy—Danone is the world’s third largest dairy company, while Fonterra is the fifth largest.
Both companies also entered the Indian dairy market in the same way. Danone made its debut in the Indian dairy market with chocolate-flavoured milk in 2013. Six years later, Fonterra, in a joint venture with Indian FMCG company Future Consumer, entered with chocolate- and strawberry-flavoured milk. These, as well as two other products, were launched last month.
But while Fonterra’s Indian dream is just budding, Danone’s Indian dairy dream lies cold in the grave. Danone, which clocked global revenues of $27.7 billion in 2018, left the Indian dairy market within five years, but Fonterra plans to not just survive a market Danone did not find worthwhile but thrive. Dreamy-eyed Fonterra, which earned $20.4 billion in the year ending March 2018, says it is targeting an annual turnover of Rs 5,000-6,000 crore ($727-872.4 million) and a market share of 5% in the value-added Indian dairy product space within the next seven years.
Fonterra is unfazed by Danone’s Indian misadventures. Its struggles competing with milk cooperatives Amul and Mother Dairy to procure milk; the difficulty of building pan-India distribution channels; and its fight to keep prices low and maintain a portfolio that comprises both basic milk as well as value-added dairy products like flavoured yoghurts and milk.
Even at a time when large Indian private dairies like Parag—which bought Danone’s Indian yoghurt plant—and FMCG majors ITC and Britannia are launching more value-added dairy products, Fonterra is still keen. It wants in on the Indian market—already worth $78.5 billion—which is growing at 15% and is poised to emerge as the largest dairy producer by next year.
It’s confident that the market it is entering has evolved from the one Danone struggled in and is primed for the entry of an MNC like itself.
Coming of age
Indian milk has changed a lot since Danone’s entry in 2013.
