Danone Plans To Make Money On 10 Cent Yogurt

Danone plans to make money selling 10 cent yogurt in places where people have less than $1 a day to spend on food.  The price of some Danone products will be 7 cents in some of the poorest countries.

According to The Wall Street Journal, “Danone is among a vanguard of Western multinationals staking much of their future on the world’s poor. Last year, 42% of its sales were from emerging markets—up from just 6% 10 years ago. Danone aims to reach one billion customers a month by 2013, up from 700 million today.”Danone is up against two challenges. The first is whether there is a taste for yogurt outside the West. In most Third World countries, particularly the poorest, residents try to create inexpensive meals that have at least some nutrition, even if it is only enough for sustenance.

The other problem is whether the world poor will be willing to pay 10% of their food budgets on any given day for yogurt, a product for which they may may not like and is developed by a large and unknown foreign company based thousands of miles away.

The move by Danone may be a charitable one. It cannot be highly profitable to manufacture a product that is sold for just a few pennies. Maybe Danone wanted to burnish its image in the West. Or, the plan may work, and people who have almost no access to nutritious foods will get a meal that they could never have produce themselves.

Douglas A. McIntyre