Asia figures high on Danone radar

French dairy major Groupe Danone, embroiled in a legal battle with its Indian partner "� the Wadias, is striking an aggressive posture in Asia. In the last month and a half, Danone has announced initiatives in China, Japan and Thailand, indicating a significant role played by Asia in the gameplan of the Euro 13 billion dairy major.

According to a company statement, the moves in Asia were in line with the company's objective "to accelerate strategic growth objectives in the Asian dairy market".

Analysts said the main reason for the Asian pull for Danone was because its sales were largely skewed towards Europe. Till last year, nearly 71 per cent of Danone's sales revenue for fresh dairy products came from Europe. "Naturally, Danone wants to reduce its over-dependence on the European markets," said a Mumbai-based analyst.

Last week, Danone announced it had bought out its partners Ajinomoto and Calpis in the group's Japanese joint venture "� Calpis Ajinomoto Danone. In this deal, Danone bought out Ajinomoto, its joint venture partner of more than 25 years.

Danone and Ajinomoto established the 50:50 joint venture in 1980, in which Calpis became a partner in 1993. A week before its Japanese move, Danone entered into a deal with Thailand's largest manufacturer of fresh dairy products, Dutch Mill Co.

A few weeks earlier, setting its eyes on the gigantic Chinese market, Danone announced a joint venture agreement with ChinaMengniu Dairy Co to cooperate for the production and distribution of fresh dairy products in China.

All the three Asian deals aim at increasing its presence in the field of fresh dairy products. Danone also has a significant presence in the bottled water segment with premium brand such as Evian.

On the Japanese deal, Bernard Hours, executive vice-president, fresh dairy products, Groupe Danone, said, "The acquisition of all shares is part of Groupe Danone's strategy to increase its position in the Asian dairy market. Japan is a priority market for Danone in Asia and the success of our products in Japan illustrates there is room for growth of products that deliver distinct health benefits."

Though, in Japan, the company will not sever ties with its JV partners. Ajinomoto will remain the exclusive distributor for all Danone Japan's fresh dairy products, and Calpis will continue to provide various raw food materials for Danone Japan's fresh dairy products.

The company's statement says that the new shareholding structure will enable Danone Japan to concentrate on its core competencies, focus on fast growing brands as well as increase investments in marketing.

In Thailand, the Dutch Mill Co has a significant presence in yoghurt, while Mengniu from China has a significant presence in milk and ice-cream.

In India, Danone has not yet been able to make a splash with its range of dairy products, despite a more than a decade old joint venture with the Wadia group. The two groups also hold an equal stake in Associated Biscuit International Holdings which controls Indian biscuit major, Britannia.