Grameen Danone Foods enters Dhaka market

Nobel laureate Muhammad Yunus, chairman of Grameen Danone Foods Ltd, launches 'Shakti' brand food items for Dhaka market yesterday.Photo: STARStar Business Report

Grameen Danone Foods Ltd entered Dhaka market yesterday with its nutrient-rich 'Shakti' brand food items to build a cushion against the subsidy it provides for selling the products at cheaper rates among the rural poor.

Grameen Danone says for now it will sell the products at higher prices in the capital to build a price leverage to sell those at lower prices in rural areas.

“We will sell our products in Dhaka with a margin aiming to sell those at lower prices to poor people in remote areas to help them get nutrient-rich food,” said Chairman of the company Nobel laureate Muhammad Yunus at a press conference in Dhaka yesterday.

The company will sell its items, now three in product line, at Tk 10 and Tk 12 in Dhaka compared to the prices it charges now in northern part of the country, Bogra, in between Tk 5 and Tk 7.

Grameen Danone, a joint venture between Grameen Group and global leader for food products Groupe Danone, moves to enter Dhaka market as it incurs losses due to selling products at lower prices in rural areas.

Starting its journey in early 2007 with an aim to stand up as a social business enterprise, Grameen Danone had promised to offer its 'Shakti Doi' at a cheap rate to help poor people, mainly children and women, get nutrient-rich foods.

But soaring price of liquid milk amid stiff competition between milk processors and sweetmeat makers has held back Grameen's vision to sell yogurt at a cheaper rate of Tk 5.

“When we started our journey, the price of a litre of liquid milk was Tk 17. Now a litre of milk costs from Tk 30-32. We are facing difficulties in maintaining low prices of our products due to such a rise in milk price,” said Yunus.

The company is selling Shakti products at subsidised rates in rural areas, he said.

Grameen Danone now runs a plant in Bogra, which currently processes about 300,000 cups of milk a month.

Established with an investment of around one million euros, the Bogra plant is the first one of the company's planned 50 plants that are expected to be set up across the country in the years to come.