It seems French dairy major, Danone, just can't ignore the Indian consumption opportunity. After burning its fingers and exiting the Indian market twice, the yogurt maker is back in India yet again. This time it has picked up a stake in Mumbai-based Greek yogurt maker, Epigamia, through its investment arm, Danone Manifesto Ventures. During its earlier stint (between 2009 and January 2018), the yogurt-maker had created the category of flavoured yogurt and yogurt-based beverages in India. With innovations such as Bengal's famous 'mishthi doi', it had actually pushed dairy stalwarts such as Amul and Mother Dairy to relook at their innovation pipeline. Danone also realised the merit of having one's own milk procurement and set up an infrastructure in Punjab. But despite making all the right moves Danone didn't succeed in India.

Ask any dairy industry expert as to why Danone missed the plot; the answer was that the French dairy's strategy of focusing on a single category (yogurt) backfired. India is a liquid milk market and for a company to expect scale by just selling yogurts that too at a huge premium was considered unrealistic. An 80 gm cup of yoghurt was priced at Rs 25, while Amul and Mother Dairy had started offering 100 gms at the same price. In fact, flavoured yogurt as a category hasn't done well in India. In the value-added dairy products category only traditional products such as 'paneer', cheese, 'lassi' and 'chaaz' have done well.

Danone has picked up stake in yet another yogurt maker. Though Epigamia has been successful, it is even more premium than Danone was and is present only in five cities, mostly in modern retail stores.

Danone also owned its distribution and supply chain as it does globally, which didn't work in India. Owning a cold chain fleet involves huge costs and will never be profitable. In order to reach every nook and corner of the country, in India one has to depend on a network of distributors. Since the company didn't have a vast distribution network, it was available mostly in modern retail stores. Danone products were available only in 50,000-odd retail outlets, while Amul and Go sell in over five million stores.

By picking up stake in a dairy start-up, the yogurt maker's intent surely is to understand the nuances of the Indian dairy business. Epigamia Founder, Rohan Mirchandani, has also been talking about looking beyond the five cities it is currently present in. However, in order to really scale up, it has to have a portfolio of multiple products. Also, the Indian Dairy business is one of low margins. A growth of even 6-7 per cent is considered healthy, while the likes of Danone are used to growth upwards of 25 per cent. It will be interesting to see the direction in which the French dairy major's newest Indian investment will take.

While the company has exited the dairy business in India, Danone continues to operate the nutrition portfolio with products such as Protinex.