Unilever in India

Unilever in India: Hindustan Lever's Project Shakti--Marketing FMCG to the Rural Consumer

With liberalization of India's economy and the opening up of markets to foreign multinationals such as Procter & Gamble, the Indian subsidiary of Unilever--Hindustan Lever Ltd. (HLL) was under pressure to grow revenues and profits. HLL had a long and stellar record of market leadership in India (with market shares of nearly 60%) in categories such as soap, detergent, and shampoos. The case documents HLL's innovative approach to penetrate rural markets (with populations less than 1,000), where two-thirds of India's population lives, with a scheme named "Shakti" (meaning empowerment).

The result is Grameen Danone and a factory that produces one-hundredth of what a typical Danone plant does, churning out a low-cost yogurt fortified with four vitamins and minerals generally lacking in the diets of the area's poorer children. Danone expects the enterprise -- one of its "social businesses" -- to eventually run at breakeven or better, but any profit will be reinvested in similar projects.

What Danone didn't expect is that selling yogurt to the bottom of the pyramid would teach so much, in realms from product development to factory design. "Two years ago, I was pushing to have people from the Western world interested in what we're doing," says Philippe Pages, Danone's director of nutrition for emerging markets. "Now I'm bombarded with requests."

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Consider what Danone has done with food fortification. In Bangladesh the company set out to put enough vitamin A, iron, zinc and iodine into a 60 g or 80 g cup of yogurt to meet 30% of a child's daily needs. That proportion was beyond anything Danone had ever attempted. It took a year and dozens of tries to figure out how to do it without the nutrients reacting to one another and souring the yogurt.

Part of the answer lay in a new, less reactive iron that Danone had learned about from an NGO -- not the sort of partner a global corporation tends to come across in its normal line of business. Now Danone is using that iron in products for the developed world, where the company sells fortified yogurt targeting things like bone strength in older women (the Densia brand) and better digestion (Activia).

The Bogra operation has also proved a template for how Danone might push deeper into the developing world. The company already makes about 40% of its sales in emerging markets, but almost all of that is to the richest 5% to 10% of consumers in those areas. One lesson Danone picked up in Bangladesh: how to help farmers keep the milk they bring to market fresh by using enzymes, since refrigeration isn't always possible. Someday that could help Danone expand in Africa.

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