Deepak's Musings #157: Danone has its sights set on making it big in India!

🍽️ How India eats

Author

Deepak Shahdadpuri
October 03, 2024

I am interested in all things consumer and insurgent brands. In my newsletter, I share what I read, think about, and reflect upon. You can follow me on Twitter at @dishahdadpuri or DSG Consumer Partners at @dsgcp.

p.s. You can click any summary link to read the full article from its source.

"If we are not big in India, in 10, 15 or 20 years, we will be irrelevant as a global player. It’s as simple as that.” - Antoine de Saint-Affrique, Danone CEO

👜 As Indians get wealthier, the demand for luxury handbags is exploding, including for the Hermes Birkin

Many luxury brands I have spoken to are making big plans for India over the next ten years. As India produces more billionaires, they see a growing demand for all things luxury.

How an elusive ‘bagwati’ is driving gold-beating returns & a quiet shift away from LV

Hermès bags are not just a luxury purchase but also a smart investment. On average, these bags have given a 13% annual return, compared with 7.8% for gold, and S&P Global Luxury Indexs -6.26%. Last year, Hermès posted an 18% return, outshining Louis Vuitton (6%). However, procuring a Hermès bag is easier said than done.

💅🏻 Kearney: India and Southeast Asia at inflection point of growth in luxury beauty

Still, on luxury, we move from Birkins to beauty. The latest Luxasia-Kearney report, Unlocking Hyper-growth in Asia’s Luxury Beauty Landscape, has just been published. It contains lots of insights, so it is a must-read for anyone who is building a BPC brand.

Asia’s luxury beauty market is on the brink of explosive growth, with Southeast Asia and India emerging as the next frontiers for international brands. As competition intensifies in mature markets like China, Japan, and South Korea, brands must act quickly to capitalize on the region's high growth potential. With the market expected to triple in size over the next decade, this report unveils the six strategic moves luxury brands must make to navigate the complexities of these fragmented markets and unlock unparalleled opportunities for hyper-growth.

Download the report here.

Unlocking hyper-growth in Asia’s luxury beauty landscape - Kearney

The markets in Southeast Asia and India will be the next gold rush—and there’s no time to lose. Six moves can help luxury brands tap into a wealth of value

🇮🇳 Unilever is open to acquisitions in India

At the recent Bernstein conference, Unilever said it continues to regard India as a jewel in its crown. Hindustan Unilever (HUL), India's biggest consumer goods company, accounts for more than 11% of Unilever's global sales. India is Unilever’s second-biggest market after the US in terms of revenue.

CFO Fernandez said: “We have established positions that we believe are very, very strong, and we have an unblinking commitment to defend India, whatever it takes. So, I will not blink to put hundreds of million to defend a position in India if it has to be defended. And we know that investors would reward us because we defend the positions whatever it takes. And we will invest in acquisitions if necessary to complete what is already a very comprehensive and a very powerful position. But if non-organic initiatives are necessary in India, we will do it in order to ensure that we cope with the potential premiumization of categories and the potential premiumization and diversification of channels.” See page 16 of the Unilever/Bernstein Strategic Decisions Conference transcript (click on link).

Unilever ready to defend India top spot with millions

Unilever is committed to defending its market leadership in India, ready to invest heavily or make acquisitions as competition grows. Hindustan Unilever remains a dominant player in home and personal care categories, with plans to grow 4-5% by volume in an expanding economy.

📢 Breaking down Swiggy’s IPO

Swiggy’s upcoming IPO is set to raise $1.25 billion at a valuation of $12-15 billion, significantly lower than its rival Zomato’s $30 billion valuation. Swiggy’s focus is on expanding its quick commerce arm, Instamart, with plans to double its dark store count by 2028. Despite turning profitable in its food delivery business, Swiggy still lags behind Zomato in key metrics like revenue and order value.

Five key takeaways from its DRHP

As Swiggy readies for a $1.25 billion IPO, its DRHP outlines its plans for quick commerce dominance while explaining why its valuation ambitions fall far short of its arch-rival Zomato’s despite bullish market conditions.

🇮🇳 Danone to re-enter dairy business in India

“If we are not big in India, in 10, 15 or 20 years, we will be irrelevant as a global player. It’s as simple as that.” - Antoine de Saint-Affrique, Danone CEO

India is a must for any global CPG company.

The CEO of Danone emphasizes India's critical role in the company's global strategy, stating that global relevance depends on its success in the Indian market. He says India offers immense growth potential with a rapidly growing consumer base and evolving food preferences.

After breaking up with Britannia in 2009, it entered India in 2010 but then exited the dairy business, although it does have a stake in India’s leading Greek yogurt brand, Epigamia.

No relevance globally if we're not big in India

Globally, Danone has four lines of operations - essential dairy items, plant-based products, specialised nutrition and water. However, in India, the French maker of Activia yoghurt, Aptamil baby food and Evian water has primarily focused on the specialised nutrition segment, including Protinex and Dexolac.

🌯 Big CPG continues to look for acquisitions: Pepsi acquires insurgent brand Siete Foods

The 10-year-old, family-owned company expects $500M in annual revenue in 2024.

PepsiCo acquires Siete Foods for $1.2B as it eyes the Mexican-American food category

PepsiCo acquires Siete Foods in a $1.2 billion deal, adding a popular Mexican-American brand and expanding its better-for-you food portfolio.

🍩 Mondelez X Urban Legend: an investment I will be tracking

Still on M&A and better-for-you (“BFY”), Mondelez has invested in the BFY doughnut brand Urban Legend, which had backed angel funding from my friends at JamJar Investments. Every conversation I have had with M&A heads of CPG companies is focused on building their BFY snacking category. Each of them has a different lens and interpretation of BFY, but the common thread is no compromise on taste and mindful portions. Why am I tracking this? Well, I know I will learn a lot whether this turns out to be a great deal or not.

This investment was made via Mondelez’s CVC arm, SnackFutures Ventures.

Mondelez’s investment in Urban Legend makes strategic sense

The healthier doughnut brand can teach Mondelez a thing or two about marketing

🍽️ How India eats

Fireside Ventures and Thinking Forks have just published a report on how India eats titled The World On Our Dining Table. The report contains interesting data points, some counterintuitive to me, and valuable insights for entrepreneurs building insurgent brands.

Download the report here.

The World on our Dining Table: A Report on How India Eats

Fireside Ventures and Thinking Forks have been speaking to a wide range of players in the F&B space, from leading multinationals to disruptive startups, to gather insights and an understanding of how India eats.

🚀 Leverage Edu x Airbnb

Leverage Edu has teamed up with Airbnb to offer short-term stays, easing the transition for students as they find permanent housing in new countries. With over 1.33 million Indian students studying abroad, this partnership will provide greater flexibility and comfort during their first few weeks in key study destinations. As backers of Leverage Edu, we’re thrilled to see them embody their mission of building global citizens and making the journey of studying abroad smoother!

Airbnb partners with Leverage Edu to promote short-term stays for Indian students

The collaboration aims to promote Airbnb as a short-term stay option for international students before securing permanent housing in their host country.

📰 Select funding & deal news

Funding and deal news that caught my attention

Health-focused bread brand The Health Factory raises $3.5 million

The Health Factory's products are now available in major cities, including Mumbai, Pune, Bangalore, Delhi, Chandigarh, Ahmedabad, Lucknow, Hyderabad, and Chennai.

ClayCo Cosmetics raises USD 2 mn from Unilever Ventures

The funding will expand the product portfolio with a Moroccan-inspired body care range, bolster branding, recruitment, and marketing efforts, and drive research and development to fuel company growth.

Connected fitness startup EGYM is ramping up with $200m at a $1.2B+ valuation

Getting healthy is big business these days. Now a startup that’s come up with a unique approach leveraging tech to help people with their exercise regimes

Lucky Energy Closes $11M Funding Round

Lucky Energy (formerly Lucky F*ck Energy) has closed an oversubscribed Series A, netting $11.75 million in a round led by Brand Foundry with additional capital from Imaginary Ventures, Sapphire Sport and Sugar Capital.

LVMH takes stake in Moncler, fuelling speculation about luxury sector M&A

Shares in Moncler rose sharply on Friday after French rival LVMH invested in the Italian outerwear specialist.

Haircare brand Seen secures $9 million series A funding

The new funding is expected to allow Seen to focus on innovation, enhance its professional sampling program to reach 10,000 dermatology practices by 2025 and grow its retail presence. 

Danone offers to buy kefir maker Lifeway Foods for $283M

The proposal to buy the company for $25 a share comes as Lifeway’s leadership remains embroiled in a bitter family dispute, and the manufacturer faces shareholder calls to sell itself.

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