Groupe Danone

GD was founded in 1919 in Barcelona, and is now the world's largest producer of fresh dairy

The Available Market

The Available Market

The Dairy Market

In 2005, Bangladesh produced about 2 2! billion liters of dairy products "nnual #il$ production tends to pea$ in the dry season %&ctober to 'arch( when there is #ore land a)ailable for gra*ing %+ar)es 2010( ,i-uid #il$ and #il$ e-ui)alent products %e g powdered #il$( represent #ore than 90 percent of total consu#ption, and products fro# processed li-uid #il$ %e g yogurt and butter( account for an additional fi)e percent %BB. 2010( " 200/ sa#ple of /00 consu#ers fro# different geographic areas and econo#ic groups found that roughly 00 percent of poor Bangladeshis had consu#ed #il$ in the prior three days co#pared with 19 percent of #iddle class consu#ers, and 22 percent of rich consu#ers In )illages, about 10 percent of the sa#ple had consu#ed #il$ in the past three days )ersus 0/ percent in urban slu#s, and !/ percent in the char %ri)erban$ areas( 3hen a fa#ily purchases #il$, it was usually shared a#ong all #e#bers 4owe)er, when there is a li#ited supply, children under fi)e are usually gi)en preference +oor fa#ilies spent about / 5 percent of their daily food e5penditures on #il$, while #iddle class fa#ilies spent eight percent, and rich fa#ilies si5 percent %4alder and Barua 200/( In general, #il$ sales increase during the forty days of 6a#adan and the two annual 7id festi)als Between 200/800 and 2005801, total #il$ production in Bangladesh grew by si5 percent 3ith a growing #iddle class, the trends toward increased #il$ consu#ption should continue %75hibit !, see "ppendi5( %+ar)e* 2010( 'il$ and other dairy products are ac-uired through three pri#ary channels9 %4alder and Barua 200/( .elf8production 8 up to /0 percent of #il$8consu#ing households in )illages and 19 percent of fa#ilies li)ing in chars %ri)erban$ areas( produced their own #il$ Infor#al #ar$et 8 buying fro# neighbors, door8to8door salespeople, and street )endors accounted for an additional 50 to 10 percent of consu#ption in )illages, 29 percent in slu#s, 20 percent in char areas, and about 09 percent for #iddle class consu#ers :i5ed #ar$et sales 8 #il$ purchased fro# for#al retail outlets represented less than 20 percent of )illage sales, o)er !0 percent of slu# sales, and o)er /0 percent for upper and #iddle class consu#ers 3ith #ore super#ar$ets in cities around the country, #iddle and upper class consu#ers are increasingly purchasing #il$ through established retail outlets

The Milk Industry

Raw Milk

'il$ is typically purchased fro# town ba*aars where 100 to 150 far#ers bring one to fi)e liters of #il$ to sell directly to local households or s#all businesses .ales for household consu#ption are usually less than one liter, but sales to s#all businesses can e5ceed 50 liters per day ;he price of raw #il$ )aries greatly depending on location and season :or e5a#ple, in late82010 the price for #il$ in a #ar$et town in rural 6a<shahi di)ision was 25 ta$a %=.>0 /1( per $ilogra# )ersus 05 ta$a %=.>0 10( per $ilogra# in a ba*aar about 00 $ilo#eters fro# Dha$a "lternati)ely, #e#bers of cooperati)es or contract far#ers will bring their #il$ to a collection center, which typically collects around 1000 liters of #il$ per day ;he collection center staff tests the #il$ for -uality and pays the far#er a fi5ed price of 218/0 ta$a %=.>0 /!8=.>0 0/( per $ilogra# ;he #il$ is then placed into 008liter containers and transported by bicycle )an to a chilling facility ?hilling centers are located in areas with regular electricity with storage and cooling e-uip#ent that can handle 1,500 to 11,000 liters of li-uid #il$ Depending on capacity, the chilled #il$ is loaded into a car or tan$er and ta$en to the processing facility ;he collection and chilling center staff and dri)ers are either paid fi5ed rates or on co##ission Traditional Processing ;raditionally, #il$ is processed into solid butter, li-uid butter %ghee(, yogurt, and #il$8based sweets 'il$8based sweets are popular during festi)als and special e)ents such as weddings 4istorically, 4indu @Ghose@ fa#ilies operate sweet shops that speciali*e in producing and selling products li$e sweet yogurt %#ishtee doi( and other #il$8based sweets ;hese sweets are one of the pri#ary uses for processed #il$ 3hile the current sweet8#a$ing industry is no longer solely do#inated by Ghoses, traditional sweet8#a$ing processes re#ain relati)ely unchanged 'il$8based sweets are usually produced through a process of boiling #il$, curdling it into a solid for#, and #i5ing it with additional ingredients .#all )illage sweet shops usually ha)e a single boiler and o)en while popular urban shops can ha)e up to 15 boilers and sell #ore than 1000 units per day Aogurt is traditionally sold in hand#ade clay pots, and other sweets are sold by weight and pac$aged in cardboard 3hile #ost sales ta$e place in the sa#e location as production, se)eral factories in districts <ust outside Dha$a distribute to retail outlets in the city %"sia .weet#eats 2010( Modern Processing

Bangladesh is also ho#e to a large and growing #odern #il$ processing industry with the top nine processors e#ploying o)er 20,000 dairy far#ers, 1,200 per#anent e#ployees, 2,000 collectors and transporters, and 100 distributors %4alder and Barua 200/( +rocessors usually ha)e centrali*ed facilities located in rural areas with e-uip#ent for large8scale pasteuri*ation, storage, processing, and pac$aging 3hile processing and pac$aging pasteuri*ed #il$ is the pri#ary focus of these facilities, they can also #a$e #il$ powder %a #il$ product that does not re-uire refrigeration(, ice crea#, and #any of the sa#e products as traditional processors %ghee, sweet yogurt, li-uid yogurt, and other #il$8based sweets( "s #il$ consu#ption increases in Bangladesh, the supply of raw #il$ struggles to $eep paceB this leads to price fluctuations and creates an en)iron#ent where speculators #anipulate supply and prices ,i#ited do#estic supply has also forced Bangladesh to i#port #il$ powder fro# countries such as India, "ustralia, and Cew Dealand .ince 1990, the prices paid for raw #il$ by processors ha)e #ore than doubled 'il$ is pac$aged in E8 and 18liter containers, while #il$ products li$e yogurt are pac$aged in sealed plastic tubs &nce pac$aged, refrigerated truc$s transport products fro# the plant to a distribution point, where bicycle )ans or s#aller )ehicles pic$ up the products for retail store deli)ery

Competitive Landscape
;he processed dairy #ar$et is do#inated by two organi*ations 8 'il$Fita and B6"? "arong =ntil 1990, when pri)ate co#petitors began entering the #ar$et, 'il$Fita had )irtually 100 percent of the total #ar$et 'il$Fita now controls about 10 percent of the #ar$et while B6"? controls 20 percent B6"? began operating in 1992 as a way to increase inco#es for dairy far#ers "ppro5i#ately se)en other enterprises account for the re#aining 20 percent of the #ar$et ;here are se)eral go)ern#ent8owned far#s around the country that ha)e -uality facilities and li)estoc$, but #is#anage#ent and corruption ha)e plagued these facilities in recent yearsB they now produce a negligible share of Bangladesh's processed #il$

GDF Supply Chain

GD:'s raw #il$ supply chain does not differ greatly fro# that of the co#petition 'il$ is collected fro# dairy far#ers at $ios$s that are located near the dairy far#ers :ar#ers are paid a fi5ed price for #il$ upon deli)ery to the collection center 6aw #il$ is brought to a chilling facility in the #orning and e)ening by bicycle ric$shaw and is stored at the facility until a truc$ pic$s it up and brings it to the factory ;he collection and chilling centers are either owned by GD: or by #il$ collection partners In addition to #il$, GD: needs to source sweeteners and nutritional supple#ents in order to #a$e its yogurt Date pal# #olasses, which is pre)alent in the 6a<shahi Di)ision, is GD:'s pri#ary sweetener and a popular sweetener for other Bangladeshi foods and be)erages ;he yogurt also includes iron, calciu#, )ita#in ", and iodine nutrients that are typically i#ported fro# 7urope ;he finished yogurt is then pac$aged in plastic cups or sachets