French food giant Danone eyes India growth without 'burning its wings'

Mumbai: Danone chief executive Antoine de Saint-Affrique has said the French food maker wants to make India a meaningful long-term growth engine but will keep an eye on profits as he has seen companies "burning their wings" by moving too fast.

"I've seen a number of people burning their wings, because they wanted to go very fast, ignoring the rules of the market and ignoring that it is a very challenging market with very good competitors," Saint-Affrique said at the Barclays Global Consumer Staples Conference in Boston, Massachusetts, on Tuesday.

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Danone wants to build a business in India that is "relevant in terms of size compared to the size of India", but do so in a way that is "structurally profitable for the long-term", he said. "If you want to be relevant in the long-term, you need to have the right critical mass and presence there," Saint-Affrique said.

The comments underline a cautious approach to a market that Danone sees as strategically important because of its demographics.

Danone's India business is largely built around the nutrition portfolio it acquired from Wockhardt for ₹1,576 crore in 2012, with brands including Farex, Dexolac and Protinex, spanning baby nutrition and adult protein supplements.

India has about 23 million babies born every year, compared with 7-8 million in China.

And the country's baby-care market is undergoing a structural shift, with nearly two-thirds of urban households now buying baby-care products online, up from about a quarter four years ago, according to Numerator.

Parents are also increasingly seeking products without parabens, preservatives, artificial colours and genetically modified ingredients, while 62% opt for premium brands until their child is at least two years old, regardless of price.

The urban baby-care market has grown to about ₹7,000 crore from ₹6,200 crore in 2023, while annual household spending has risen 12%. More than two-thirds of parents use "no nasties" products until their children turn two, with average annual household spending reaching about ₹6,800.

Danone has shifted its India strategy towards specialised nutrition after exiting dairy in 2018. It had entered dairy separately in 2010 but struggled to compete with large cooperatives such as Amul and Mother Dairy. Before that, Danone ended a 13-year biscuit partnership with Britannia in 2009.

The nutrition-led strategy puts Danone in segments benefiting from a growing consumer focus on preventive health, immunity and protein. India's nutraceuticals market is estimated at about ₹55,000 crore, with fortified and functional foods accounting for about half the market and dietary supplements another quarter.

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Danone said it is investing "in a very intentional manner" in India, primarily to build the Aptamil brand and its credibility. Danone chief financial officer Juergen Esser said the company is "building a sizable business in India" even though it is starting from a small base. The category, he said, is "just at a very early stage in India" and Danone is already co-leading it.

Saint-Affrique said Danone's current approach in India is an example of how it wants to build businesses in emerging markets.

"What we are doing currently with infants in India is a good example. You systematically build a business in a way that is very profitable and is snowballing, so you create a positive loop," he said.