Danone plans measured expansion in India
Antoine de Saint-Affrique, Danone’s chief executive, said the French food company wants to develop India into a substantial source of long-term growth. Speaking at the Barclays Global Consumer Staples Conference in Boston on Tuesday, he said Danone would continue to monitor profits as it expanded. He referred to companies that had “burned their wings” by moving too quickly and overlooking the conditions of the Indian market.
Danone’s stated aim is to create a business whose scale is significant relative to India’s population while remaining sustainably profitable. Saint-Affrique said a durable presence would require sufficient scale and market coverage. He described India as strategically important because of its demographic profile, but also as a difficult market with established competitors.
The company’s Indian operations are mainly based on a nutrition portfolio bought from Wockhardt for ₹15.76bn in 2012. The portfolio includes Farex and Dexolac infant-nutrition products, as well as Protinex adult protein supplements. India records about 23m births each year, compared with roughly 7m-8m in China.
Consumer behaviour in India’s baby-care market is also changing. Numerator estimates that almost two-thirds of urban households now purchase baby-care goods online, compared with about one-quarter four years earlier. Parents are increasingly looking for products without parabens, preservatives, artificial colours or genetically modified ingredients. Some 62% choose premium brands until their children are at least two, irrespective of price.
The urban baby-care market has expanded to approximately ₹70bn, from ₹62bn in 2023, while yearly household expenditure has increased by 12%. More than two-thirds of parents use products marketed as free from unwanted additives until their children reach two. Average annual household spending is about ₹6,800. Across the wider nutraceuticals market, estimated at ₹550bn, fortified and functional foods represent about half of sales and dietary supplements about one-quarter.
Danone moved towards specialised nutrition after withdrawing from dairy in 2018. It had entered dairy in 2010 but faced large cooperatives including Amul and Mother Dairy. The company had earlier ended a 13-year biscuit partnership with Britannia in 2009. Its current investment in India is focused primarily on building the Aptamil brand and its reputation. Chief financial officer Juergen Esser said Danone was developing a sizeable operation from a small base and that the relevant category remained at an early stage, although Danone was already one of its joint leaders. Saint-Affrique said the infant-nutrition business illustrated the company’s approach in emerging markets: building a profitable operation gradually and reinvesting as it grows.
