Danone may have exited the dairy segment in India under its own subsidiary, but its JV with Japanese major Yakult, is building on the still nascent probiotic segment with new variants.

After having had a solo probiotic drink for the past decade, Yakult Danone India is now ready to experiment with a new fortified, vitamin-infused probiotic drink under the Yakult ‘Light’ brand, which will be pegged at a premium to the regular drink.

“Probiotics was a new concept in India when we entered in 2008 with Danone. While Danone may have exited the dairy segment in India, we will continue to manufacture and market Yakult, and will be injecting more capital into our joint venture with new products like Yakult Light,” said Minoru Shimada, Managing Director, Yakult Danone India.

Recently, the French dairy company had announced that it would exit the dairy segment in India, but its JV with Yakult is expected to stay intact as it still hopes to have a foothold in the dairy segment.

N Chandramouli, CEO, TRA Research, said: “Danone has been more of a strategic investor in the joint venture with Yakult and will continue to stay invested. India is still the biggest dairy market; but its dynamics is different from the rest of the world. And players like Yakult and Danone will be building on the probiotic segment, which is going to get big with time, despite the JV not making money in the country as of now.”

Domestic players

Yakult may have created the probiotic milk category in the country, but of late, it has been facing intense competition in the fermented milk segment from domestic players such as Amul and Mother Dairy.

Having set up a manufacturing facility at Sonipat in Haryana, the firm has been steadily building its distribution with a direct go-to-home model under ‘Yakult Ladies’, in certain markets. Currently, it reaches out to 13,000 outlets, and 300 odd Yakult Ladies drive around in scooters in the Delhi-NCR and Mumbai markets to educate customers and deliver the products at home. Smaller markets such as Jaipur and Chandigarh have also been targeted for the direct distribution programme.

However, making money in the segment may take longer. “We have invested ₹380 crore since the time we entered India and have been steadily increasing our capacity to 2.7 lakh bottles a day. However, we are not profitable as of now, but have been growing at 20 per cent for the past five years. There is consumer demand in India; even globally, the probiotic category is projected to grow at 7 per cent till 2022,” addded Shimada.

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