Business Today

Crumbling Cookies

China and India are two problem areas for Danone globally.

By Krishna Gopalan | Print Edition: July 15, 2007

For food products major, Groupe Danone, the Asian market has become a bit of a bother. In India, it's been doing battle with the Wadias over its holding in biscuits major, Britannia Industries. And, in China, Danone is on the verge of a potentially long drawn-out legal battle with partner, Wahaha.

Danone and the Wadias are equal partners in a company called Associated Biscuits International Ltd (ABIL), which holds just under 51 per cent of Britannia's equity capital. Issues between the two parties include royalties payable over brands like Tiger and Little Hearts and the fact that Britannia's financial results have not been included in Danone's consolidated numbers.

Now, it does seem that Danone is open to exiting its 25 per cent holding in Britannia. Philippe-Loïc Jacob, Secretary-General, Groupe Danone, recently told media in Paris that he expects negotiations with the Wadias to end in July following which Danone would get started on its plans for India. When contacted, the Wadia Group spokesperson said, "The joint venture is fully active."

The China operations, meantime, where Danone holds a 51 per cent in a JV, hit a flashpoint when the venture's Chairman Zong Qinghou resigned recently. This came after it was discovered that there were around 20 companies set up by Qinghou, which were selling products identical to those manufactured by the JV. In 2006, Asia-Pacific accounted for a little over 17 per cent of Danone's global sales of m2.43 billion (Rs 13,365 crore).

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