Monograph of co-production companies: Délice-Danone

Published : Wednesday 23 March 2016

For the study of the Mediterranean Coproduction Observatory dedicated to Tunisia’s potential as to the development of coproduction, which is to be released in March 2016, several monographs of European companies involved in coproduction operations with Tunisian companies, and vice versa, were done. Before the release of this report, IPEMED presents the monograph of the Tunisian company Délice, involved in a coproduction operation with the French company Danone.

Délice – Danone:  a strategic partnership to conquer the local market

 The group Délice-Danone, a major actor of the Tunisian agri-food industry, is present on the yoghurt, milk and juice markets. The group recently established itself as a holding company in order to go public - which occurred in 2014. It relies on several subsidiaries. The STIAL (Société Tunisienne des Industries Agroalimentaires) is the main subsidiary of the group, in charge of producing yoghurt, milk and juice, while SOCOGES is the distribution subsidiary of the group. The group Danone holds 50% of these two entities. As for the Compagnie Fromagère, making cheese, it is held at 42.5% by the French group Bon Grain. The Tunisian holding holds 100% of the other subsidiaries. Here, we will look into the STIAL – Danone and SOCOGES – Danone partnerships.

In 1997, the group Danone took an interest in the Tunisian market within the internationalisation of its activities. It considered Délice - a family group created in 1978 by Hamdi Medded, one of the only promising private groups in the sector. Following its traditional partnership approach with local actors, Danone decided to spend €7 million to acquire 50% of STIAL.

Danone’s motivations were the same as in most acquisitions of this kind: benefiting from local partners’ knowledge of the market as well as their existing production and distribution circuits­. Délice, on the other hand, wanted to benefit from the expertise and technical know-how of the company, as well as from the security and financial power­ of a great international group. However, contrary to what generally happens in this type of operations, Délice did not want to benefit from Danone’s brand image. This is why the co-branding strategy always remains the same, as the brand “Délice” sold more than the brand “Danone” on the concerned markets.

Thus, the STIAL now benefits from the strength of a multinational ­group: (i) personnel cross-training abroad; (ii) research and development centre based in Barcelona for the entire group; (iii) integration in the group as a business unit. Although the STIAL accounts for a very low activity in the huge group Danone, it can be considered as one of the most profitable business units in the group.  Thus, the group Délice is rather independent in its activities and decision-making, as Danone has 3 to 4 expatriates in Tunisia in average.

 

Today, the group Délice-Danone is a leader on the Tunisian market. It holds 65% of yoghurt market shares, 60% of milk market shares and 70% of butter market shares. Growth perspectives are also very promising. Indeed, the group relies on the change in dietary habits as well as on the increase of milk and yoghurt consumption. It also has a diversification strategy, with the creation of new products to broaden the range. However, this strategy could fail due to the small size of the Tunisian market.

Another significant obstacle to the agri-food industry regards distribution logistics­, as there is no central purchasing body and retail distribution still prevails. Thus, the strength of the Délice group relies on its distribution subsidiary SOCOGES, which has an excellent knowledge of the Tunisian local market and benefits from Danone’s expertise in logistics. Thus, after going public in 2014 for 120 million dinar (15% of the capital), the strategic partnership between Danone and Délice enabled to reinforce the group Délice on the Tunisian market thanks to the financial resources, expertise and research and development of the group Danone. Likewise, investment is profitable for the group Danone, not only financially but also in its conquest of emerging markets.

North-African integration

Exportations are increasing the turnover of the group Délice-Danone. Indeed, today they account for 7% of yoghurt activity and 10% of juice activity. The main exportation market is naturally Libya, considered as an extension of the Tunisian “national” market, especially in the agri-food industry. Thus, Délice holds 20% of the Libyan yoghurt market shares. However, Délice can only export juice towards Moroccan and Algerian markets as Danone is already present in both countries and forbids any competition among its various international entities. Délice exports the rest of its production towards Sub-Saharan countries.

 

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