Three months after the French food company Danone acquired Wockhardt’s nutrition business at Rs 1280 crore, its Indian subsidiary Nutricia International specialising in baby and medical nutrition unveiled its growth plan. Nutricia started operations in August 2012 following the acquisition of Wockhardt Nutrition. Its baby nutrition portfolio comprises of brands such as Farex, Dexolac and Nusobee. These brands together command 8% share of the Rs 2500 crore baby food market in India and hold the second position in the market which is dominated by with over 75% share. The company has Protinex as a leading brand in the Rs 375 crore medical nutrition category where it competes with British Biologicals’ brand B-Protein.
“The fact that there is an immense opportunity of growth in an emerging and under-penetrated market like India is an obvious thing, but the challenge is in knowing how to take that opportunity”, said Laurent Marcel,the company’s managing director told reporters at a press briefing today. Emerging markets contribute over half of the revenues of Danone, which earned a topline of Euro 20 billion at the end of 2011. The company plans to double its sales in the next three years first by consolidating the local brands acquired from Wockhardt and then introducing select brands from Danone’s international nutrition portfolio based on its understanding of the Indian market.
“The baby food market is growing in India at a rate of 15-20% every year and we want to grow faster than the market”, stated Dariusz Kucz, Asia Pacific vice president of the company’s baby nutrition division. The company is the leader in the baby food segment in the Asia Pacific region – enjoying leadership in key markets of China, Malaysia and Thailand. In India, the baby foods face ban on advertising, as they cannot be advertised for consumption for babies up to two years of age. “We find Asia to be more regulated than Europe and India to be more regulated than some other markets in Asia”, said Marcel. With the advent of another multinational player like Danone, Nestle, the leader in the baby foods market in India, has strong reasons to worry and pull up its socks. Milk and nutrition segment, which includes baby foods brands, is the largest for the Indian subsidiary of the Swiss food company contributing 45% to its total revenues.
The company is already battling local and international players like ITC, HUL and Glaxosmithkline Consumer Healthcare in its second largest product segment of noodles. The company has been facing slowdown in overall volume growth as a backlash of aggressive price increases taken by it, especially in its baby food products. Danone has the expertise and financial muscle to do what Wockhardt was not able to do in case of the legacy baby product brands like Farex and Dexolac.