Danone became the second dairy giant in two days to stress
the potential for opportunties in India, as the group highlighted its emerging
market muscle amid difficult times in its core European markets.
The water-to-yoghurt group, which earlier this year paid
$355m for Wockhardt Nutrition, India's top-ranked baby food group, said that
parts of the market there looked better than in China.
India's growth in infant nutrition, a largely dairy-based sector,
"will outpace China's", said Laurent Marcel, the head of Danone's India
Indeed, the division plans to double its sales in the
next three years, Mr Marcel said.
The comments come a day after Fonterra, the world's biggest
dairy exporter, revealed it was setting up a Delhi office to "gain a better
understanding of", and "explore opportunities in", India's dairy market,
responsible for one-sixth of world production.
Many commentators have compared India, with its growing and
increasingly affluent population, to China, whose rising demand for dairy has
raised it to a major importer.
And both Danone and Fonterra are reported to be interested
in increasing their Indian presence through the purchase of a controlling stake
in Hyderabad-based Tirumala Milk Products, the second-ranked private supplier
of liquid milk in the country's southern states.
Tirumala, said to have an enterprise value of some $450m, is being put up for sale by shareholders including
Carlyle, the private equity giant, which owns a 20% stake.
Core market woes
For French-based Danone, India's potential growth represents
a means of helping offset the weakness in its historic European markets, where
demand is being sapped by weak economies and high unemployment.
The group in June warned on profits, blaming a "swift deterioration
in consumption" in southern Europe, in much of which economic conditions remain
Danone earlier this month was revealed to have become a
target for Nelson Peltz, the activist fund manager, with a record of fostering
shake-ups at the likes of Heinz and Kraft, who said that the French group's
performance could be improved by cutting costs and returning cash to shareholders.
Danone shares closed 0.5% higher at E49.00 in Paris.