The Power of Yogurt

While focusing on venture development and growth, this week’s readings further explored the idea of providing social solutions for bottom of the pyramid markets without “going the nonprofit route.” In this post, I would like to highlight one such company that fits this model. Grameen-Danone Foods was launched in 2006 as a social business enterprise union of the international food giant Danon and the Bangladeshi non-profit Grameen, which is primarily known for its work in microfinance. Muhammad Yunus, the founder of Grameen, proposed a joint venture between Grameen and Danone with the objective of supplying nutritious food to poor Bangladeshi children. According to UNICEF’s 2008 State of the World’s Children report, 30% of all Bangladeshis and 56% of Bangladeshi children under the age of 5 suffer from moderate to severe malnutrition. To address this problem, Grameen Danone Foods Ltd. produces a yogurt called “shakti doi” (power yogurt), which is made from pure full cream milk that contains protein, vitamins, iron, calcium, zinc, and other micronutrients. This yogurt is primarily intended for children, but it can be eaten by adults as well. One of the most exciting aspects of this yogurt is its affordability. The price of each 80 gram cup of yogurt is 5 taka or 5 cents. Factories have been set up to produce this “power yogurt” all over Bangladesh, employing large numbers of people, and plans to expand this model to other countries are in the works. The Grameen-Danone Foods model is currently a “no loss, no dividend” one, and the company is confident that investment will remain strong. Because the product is suitable in much of South Asia and the model itself can be adapted all around the world, shareholders continue to invest although they are not currently being paid dividends. The framework for strategic innovation at the base of the pyramid, as discussed in the MIT Sloan Management Review article, stresses affordability, acceptability, availability, and awareness. I believe that Grameen-Danone’s success stems from its business strategy that focuses on these very areas. “Yogurt” for thought: Will paying shareholders dividends change the culture of the organization? If so, in what ways?