Grameen Danone

Grameen Danone is a social business that produces nutritious yogurt for children in rural areas around Bogra and in urban areas around Dhaka. They did a study of the diets of children in Bangaldesh and identified a number of areas where the children were not getting enough nutrients. The yogurt was designed to ensure that the children get those nutrients that they are missing, be tasty so that the kids like it, and be affordable.

I don't know about the kids, but Ross loved it!

The result of this study and plan was in 2006 construction began on the plant and but February 2007, it started operating. At the plant they collect milk from micro cow farmers who are borrowers from the Grameen Bank, and they also collect from the Grameen Fisheries and Livestock Project.

The Grameen Danone Factory

The milk is collected at a couple remote locations that have a automated machine which measures and tests the milk. The farmers are paid 20 to 30 taka for the milk depending on the quality. In 2008 they started with 234 farmers and they now have 400, each with 3-4 cows. 90% of the milk is collected this way, and most of the remaining 10% is collected from the Grameen Fisheries and Livestock Project. They have to offer the farms a competitive price because the farmers can sell their milk in the local markets as well.

The milk is then brought to the factory to be processed. The factory has solar panels heating the water, and a rain collection system as well in an attempt to reduce their energy and water consumption. We were not allowed to see much of the factory actually, because they are concerned about keeping it clean. So we could really just sit in the office and talk to the manager.

The yogurt is then sold through yogurt ladies, who are borrowers from the Grameen Bank, in rural areas. The women get a 1 taka commission when they sell them, so that the final price consumers pay is 6 taka (less than 10 cents) for a 60 gram cup. They have a mango flavour which is 7 taka, and both are more expensive in Dhaka because of the transportation costs.

A Cup of the Shaktidoi Yogurt

The factory has 100 marketing and sales employees and 500 yogurt ladies. Each lady sells approximately 70-80 cups per day, and on the whole they sell 100,000 cups per day. The factory provides the yogurt to the ladies on credit, and they repay it the next time they buy more yogurt from the factory.

Like most Bangali managers, he did not have much idea about the financial state of his business. He kept saying it was hard to be sure. He said that the plan was still losing money - apparently the plan was to be profitable by the end of 2011, which still gives them time to reach that target. However their original plan was definitely more ambitious.

Posing with the Shaktidoi Lion!

 One of the interns had done a project on Grameen Danone, and they were supposed to already have a second plant and have begun constructing a third. However it sounds like they have had issues with production a couple times which have set them back. On the whole though, it was a very interesting trip.

 It seems like once again the major limitation is the demand for the product. Like with the water at Veolia, they are having trouble convincing people that their product is worth spending 6 taka on. The people in the rural villages are used to making their own yogurt, and not paying anything. But apparently the yogurt that can be bought in the markets is more expensive and not as nutritious. You would think with that kind of competitive advantage on their side they would find it easier to sell the yogurt. I am beginning to question Grameen marketing campaigns. They say that the way they promote most social businesses is through centre meetings, or travelling salesmen.

That was our trip to Grameen Danone, which was right next to the eye care hospital, but that is a whole new post!

Cheers,

Mike