French yogurt brand growing fast in Korean market

Kim So-hyun in Seoul/The Korea Herald

Seoul (The Korea Herald/ANN) - It has been four years since French food product maker Danone entered Korea and its Activia, the world's best-selling yogurt brand, is already the second-best-selling drinking yogurt in local hypermarkets after Namyang's Bulgaris.

Last year, Danone joined hands with Korean fresh food maker Pulmuone and is aggressively expanding distribution channels here where home delivery accounts for 40 percent of the yogurt market.

"We plan to gain a firm foothold for Activia in the Korean market this year in partnership with Pulmuone and then start introducing other yogurt brands such as Danacol and Actimel," Jean Moe, chief of Danone Pulmuone, said in an interview with The Korea Herald.

"While we continue to invest in our global brand Activia, we are developing joint venture brands with Pulmuone based on Danone's R&D and marketing know-how as the global No. 1 dairy product maker and Pulmuone's strength as a leading fresh food producer in Korea."

Danone Pulmuone expects Activia sales, which have grown by about 30 percent on annual average, to jump 75 percent this year on new products and synergy with Pulmuone.

Over 1 million bottles of Activia Fresh rolled out of Danone's factory in Muju, North Jeolla Province, and entered the market just 10 weeks after its launch in September.

"We plan to expand the production lines in Muju and raise profits," Moe said.

Danone's patented lactic acid bacteria are brought in from France to be made into yogurt at the automated factory in Muju without artificial additives.

Activia products are mostly sold at hypermarkets and smaller supermarkets now, but they will expand to home delivery and restaurants through partnership with Pulmuone which has a vast home delivery network for its green vegetable juices.

"The Korean market for dairy products such as yogurt relies too much on 'extras' rather than on the quality," the general manager said.

"All of your rivals throw in a few extras instead of promoting their product quality, and this becomes a major factor in choosing yogurts."

Moe also noted that Koreans still think of yogurt simply as a snack whereas in the West, there is a much greater variety of yogurt such as products to consume in the morning and evening.

Activia's Bifidus Actiregularis, patented in 21 countries, has been scientifically proven to help speed up digestive transit time and reduce gas in the stomach, she added.

In Asia, Activia is sold in eight countries - India, Bangladesh, Thailand, China, Japan, Indonesia, Vietnam and Korea. Japan, which has a simpler distribution system, is its largest Asian market amounting to 10 times the size of its Korean market.

Danone set up a research and development center within Korea University where it recruits students for sensory tests and product development using machinery for pilot production.

"About six researchers work there with support from our Asian headquarters in Singapore," Moe said.

"In addition to flavor and sensory tests, the R&D center does all the sourcing including ingredient validation and tests."

Moe believes the partnership with Pulmuone will improve Activia's post-production quality process as the Korean food maker is an expert in home delivery products which have a short shelf life.

"We are working with Pulmuone for various cooperation in marketing as well as R&D. We participate in Pulmuone's training programs, for example," said the former chief of Bausch & Lomb Korea who worked at Merck Sharp & Dohm and Procter & Gamble Korea.

In addition to dairy products, Danone sells internationally known brands of bottled water such as Evian, Volvic and Badoit, as well as biscuits, cereals and baby food.

The company has about 100,000 employees and 184 factories worldwide. Less than 100 people work in Korea.

After it became a joint venture with Pulmuone, the company has launched "Activia Premium," "Maeil Achim Multivitamin & Mineral" and "I Love Yogurt."