Dilemma: How much will the nutritional product market get affected by Danone’s decision to quitthe milk product market?

Globally, Danone had four lines of operations—dairy, beverages, early life nutrition, and advancedmedical nutrition. It re-entered in India in 2010 on its own after two failed joint ventures, with theWadia Group in the 1990s and the Rahul Narang Group in the 2000s (Mitra, 2018). Its dairy businessdealt in milk products, which consisted of yogurt, misti doi (sweet curd), cold coffee, and flavoredmilk. Its other product line included a nutrition portfolio (The brand such as Protinex, Aptamil, Farex,Dexolac and Neocate belongs to this portfolio) which is still the best performing business for Danonein India. Danone had acquired this nutrition business from the pharmaceutical firm Wockhardt Ltd in2012 before integrating it with its dairy business in 2015. A year after ending a joint venture withbiscuits major Britannia Industries, it had forayed into India’s dairy market in 2010. The tie-up withBritannia was one of India’s longest running business partnerships. The French firm was the first tointroduce yogurt variants in India. However, the concept was soon copied by its competitors and wasaccepted only by a particular class of customers. Danone intended to create a market for yogurts inIndia and increased its per capita consumption, which was 3–4 liters in 2009 (Shasidhar, 2016). Themindset was shared by an anonymous manager as follows: “The first intention is to share with theIndian population that yogurt or dahi is a fantastic contribution to their diet” (Shasidhar, 2016).Danone also explored the inorganic means to expand its business in India. It was in talks to buyIndore-headquartered Anik Industries’ dairy business. However, Danone lost the acquisition to Frenchdairy major Groupe Lactalis SA, which was vigorously looking for more acquisition opportunities inIndia (Roy, 2018). Danone decided to exit the dairy business in India after three failed attempts to tap theworld’s largest potential market for dairy. The company discontinued its operations in Rai near Delhi(Mitra, 2018). Minority contribution to the overall business in India was the statement given for its earlyexit (D’Souza, 2018).According to the financial service firm Edelweiss Services, increasing consumption was expected totake India’s dairy industry from `5.4 lakh crore (USD 71.43 billion) by value in 2016 to `9.4 lakh crore(USD 134.29 billion) in 2020 (D’Souza, 2018). In regard to the growing opportunities of milk products,Jochen Ebert, Managing Director, Danone Foods & Beverages India Pvt Ltd stated: “Young females whoare working, find it a good idea to get the yogurt or dahi from outside instead of setting it at home. Thatmeans there is an opportunity for commercially produced yogurt and we are focusing on that opportunity”(Shasidhar, 2016). Despite this, and the huge opportunity in milk product sales as Indian consumerpreferences shifted from milk to value-added milk products such as yogurt and flavored milk, Danonedecided to withdraw (Shasidhar, 2016)

The price of a carton of milk went down by 25 cents today. What will probably happen to the quantity of milk demanded?

In this graph presented in the lecture notes, the USDA has imposed a price floor of $1 per pound on the sale of dry milk, and the government is willing to purchase dry milk from farmers at this price.  Which of the following statements is not a primary concern to analysts who have studied this program?Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer.aThe policy may lead to calcium deficiencies among some consumers who become priced out of the market for milkbThe policy is likely to entail high costs to taxpayerscThe price control will lead to excess demand for milk, thus resulting in long queues (lines) for the productdMany of the benefits of the policy will likely accrue to wealthy corporations in far away states that are not necessarily the intended beneficiaries of the policy.

If producers of milk try to maintain a price above the equilibrium price then the condition of excess demand will exist.Group of answer choicesTrueFalse

Multiple Choice QuestionIn the food industry, marketers often address consumer concerns by changing product formulations (i.e. removing unhealthy ingredients). This is an example ofMultiple choice question.high learning productsproduct improvementscreating a new use situationfad product life cycles