Yakult Danone may cater to South Asia from India

Yakult Danone India Pvt Ltd, a 50:50 joint venture between Groupe Danone and Yakult Honsha for production and sale of probiotic products in India, is looking at utilising its factory at Sonepat near Delhi to cater to the South Asian markets such as Nepal, Sri Lanka and Pakistan.

The company, which entered the Indian market in 2007, currently has an installed capacity of one million bottles per day and has set up an assembly line for one lakh bottles per day.

The Japanese and the French companies’ probiotic product JV
sells around 35,000 bottles per day in Delhi, Chandigarh, Mumbai, Pune and Jaipur.

Kiyoshi Oike, managing director of Yakult Danone India, said part of the Indian capacity could be used to launch products in the South Asian markets.

He said the cost of producing probiotic drinks was much lower in India compared to Europe as most of ingredients like skimmed milk and sugar were sourced locally. Yakult is priced at `10 per bottle in India, while it is `35 per bottle in Europe.

However, Oike said India cannot be used as a manufacturing base for exports to the European countries as the shelf life of Yakult is just 40 days.

“We could look at exporting Yakult from India to Nepal, Sri Lanka and Pakistan,” he said.

Meanwhile, Yakult Danone has drawn up aggressive plans to extend its footprint in India after a recent research along with Nielson revealed that awareness on probiotic drinks was on the rise in cities like Delhi and Mumbai, where it has launched its product.

After foraying into Delhi and major western markets, the company now wants to enter the southern market, where it launched Yakult in Bangalore on Wednesday.

Oike said the company was also looking at bringing more probiotic products into India.

“Yakult has more than 20 probiotic products drinks, which we hope to bring to India some day,” he said.

To begin with, it will launch Yakult Lite in two years from now. The decision to place the lighter version - less calories - in the domestic market was result of a survey, which showed that health-conscious locals, especially Diabetes patients, preferred their drinks with less sugar.   

Oike said Yakult Lite constituted around 10-20% of the company’s worldwide sales of 30 million bottles per day. He said it would entail further investment as it has different packing. The company has already invested `148 crore in India.

Oikes said Yakult Danone would eventually ramp up capacity in India and could set up another factory in South. This, he said, the second manufacturing unit would involve an investment of `100 crore.  

“Once we have established our presence in all parts of India. The next step would be to set up second factory in South,” he said. In China where Yakult sells around one million bottles per day, it has two factories with a total capacity of 1.5 million.

According to a Frost & Sullivan report, the probiotic product market is currently $14 billion and is expected to reach $17 billion by 2013.