Danone India: The Challenges of Expanding into an Emerging Market

Abstract

The case is about struggles of Danone India, a French based firm that envisioned high stakes in the Indian dairy market but had to exit early due to its inability to adapt to the Indian market conditions. The firm had a vision of “giving fresh impetus to the business and conquering the world” that transcended boundaries by providing healthier dairy products to the customers. Danone plans to expand into emerging markets by 2020, an endeavor driving 12 percent of its dairy business. The 22-billion-USD French food giant entered in India in the year 2010. It forayed into India’s dairy market with milk products such as flavored yogurt, buttermilk, cold coffee, curd, and smoothies. Danone was known to excel in its nutrition-based products, which were more than 90 percent of the business in India. However, having covered 200,000 retail outlets in 20 cities once, Danone struggled to expand and failed to capture the Indian dairy market, leading to its exit in 2018. Dilemma: How much will the nutritional product market get affected by Danone’s decision to quit the milk product market? Theory: Environment scanning and selecting the right strategy to quit Type of the case: Observation-based applied single case study Protagonist: Not needed. Case written with information drawn from secondary sources Options: Out of the various exit strategies such as acquisition, merger, IPO, or shutting down operations, why did Danone choose the last option? Discussions and case questions: The case discusses the reasons for the failure of the Danone milk business in India. Was pricing the most dominant factor behind the exit of Danone from India? Further, the case also discusses what lessons Danone should learn from its milk segment failure in India that may help it grow in the nutrition business in India. How can the company withstand the competition in the category of nutritional products? Will the firm re-enter the Indian market in the near future?