Danone, Avesthagen in functional food JV

Danone, a $14 billion biscuits, beverages and dairy major, through its investments in Avesthagen and in partnership with it, will develop a series of plant-based active ingredients for functional foods with nutritional benefits.

Danone has invested euro 25 million in Avesthagen to pick up a minority stake.

Speaking to Business Standard, Jean-Luc Tonneau, strategic planning director, Danone Research, said, "Our interest in Avesthagen is purely research-related leading to the development of nutritional products. We also plan to involve Avesthagen in Danone's research and development (R&D) innovation model." He added the two companies had not met jointly to strategise R&D activities, but would soon do so.

"We also have a few opportunities to explore with Avesthagen in the functional food area, through our brands such as Activia (giving energy while you travel), Actimel (giving protection and resistance to infections) or the recently launched Esensis for better skin performance," he added.

The French company that has an R&D budget of euro 150 million (1.2 per cent of the group's sales) annually pursues 'glocal' (global plus local) strategy to expand its footprints globally. At present, the firm has active presence in 42 countries. "We manage innovation by integrating different inputs and acting glocal with our research partners," he  said.

Danone was also mulling a community model for India to develop and market fresh dairy products other than the traditional city/retail model, said Tonneau. Community model works through groups wherein the company commits to build factories, train people and help raise finance. Later, the community operates the business locally. One such model is being tested in Bangladesh through a joint venture with Grameen Bank.