French dairy producer Danone plans to abandon international brands in Russia. We are talking about names such as Activia, Alpro, Actimel and Danone. This was told to Izvestia by a source in the market. The company confirmed that it is “exploring various options on how to make international brands more relevant to the local market.” Earlier, information appeared in Telegram channels that the manufacturer could use the Prostokvashino trademark in the country instead of the main names.
Took care of your
French dairy producer Danone intends to abandon its global brands in Russia. We are talking about such as Activia, Alpro, Actimel and directly Danone. This was told to Izvestia by a source in the market who is familiar with the plans of a foreign enterprise. As reported on social media, the French are exploring different options. For example, they may use local names for products currently sold under major brands. So, the company can add yogurt, curd desserts and other products to traditional milk, kefir, cottage cheese, sour cream “Prostokvashino”.
“We are exploring various options on how to make international brands more relevant to the local market,” Danone Russia told Izvestia, answering a question about whether the manufacturer plans to withdraw international names from the local market.
The fact is that in October 2022, the French company announced its intention to transfer control over the local production of dairy products and vegetable drinks. The deal will not include the baby food business at the Istra-Nutritsia plant. These are the Nutrilon, Malyutka and Malysh brands. It is likely that the organization will transfer its assets to management, while retaining the buyback option, experts noted. But global names are unlikely to pass to a new owner, usually international companies do not allow them to be used after the sale of business in the Russian Federation.
Danone has been developing in Russia since 1992, on the territory of the country the manufacturer has 13 factories that produce dairy products, yogurts, desserts, curds and so on. We are talking about such brands as Prostokvashino, Activia, Actimel, Rastishka, Danissimo, Danone, BioBalance, Theme, Alpro, and others.
One to another
So far, there are no specifics in the process of transferring part of the business of the French company Danone to the new owner, so it is difficult to assess how the situation will develop, Aleksey Gruzdev, head of Streda Consulting, told Izvestiya.
– Now the company is testing the expansion of the line under the Prostokvashino brand – yoghurts, curds and other dessert products have recently appeared on the shelves. But other options are also possible: for example, Danone may not object to the use of names consonant with global brands and recognizable packaging design elements – in particular, “ActiviYA” instead of “ActiviA,” the expert noted. – In general, a lot depends on how the new owner will support the rebranding in marketing, promotion and communications and how long the process will be.
In any case, the new owner will have to invest heavily in marketing and promotion in order to save shelf space and interest buyers without losing market share.
Andrei Karpov, head of the Association of Retail Market Experts, agrees with him: new brands will have to be seriously promoted so as not to lose market share and their consumers. As a rule, companies manage to maintain their positions with the right approach.
— There are already various examples on the market of replacing a global brand with a local one, for example, Coca Cola was successful in this process: the company stopped the production of a traditional drink in the Russian Federation and quickly introduced a new consonant name to consumers. This product took the same place on the shelf, so people understood very well that it was only about changing the name, they easily switched to a fresh brand,” the expert said. – As a result, sales of cola managed to increase. But there are also bad examples – for example, Pepsi delayed the presentation of local names, plus the new names did not in any way resemble familiar brands, and sales fell.
Izvestia sent inquiries to the leading retail chains: X5 Retail Group (Pyaterochka, Perekrestok), Magnit, Auchan, Lenta and others.
The situation is developing against the backdrop of reduced consumer demand for dessert dairy products, which could complicate the situation. According to NielsenIQ, yogurt sales in Russian cities have fallen by more than 15% over the year. We are talking about both spoon and drinking products. Sales of fermented baked milk, curdled milk and cream also decreased. This is evidenced by data for 12 months to March 2023.
Demand for sweet and sour-milk products is indeed declining, Igor Karavaev, chairman of the Presidium of the Association of Retail Companies, told Izvestiya. In large retail chains, sales volumes in February-March 2023 decreased by 2–6% compared to the same months last year. The reason is restrained consumer behavior, as well as the correction of supply and demand after the rapid development of this segment in previous years: sales of yogurts and desserts grew at a double-digit pace, the category became one of the largest in terms of the number of items on the shelf, Igor Karavaev noted. At the same time, the demand for the main dairy products is not decreasing, he added.