Danone and Grameen Bank Joint Venture
One of my favorite partnerships was formed in 2006 between Danone and Muhammed Yunus’ Grameen Bank. For both of them, Bangladesh was a hot spot for their products: Danone for their fortified yogurt and Grameen for their microfinance. Grameen is known for their innovation, where they provide loans to impoverished clients who start their own businesses: They can earn a sustainable living rather than just receive a handout, thereby finding a skills-based way out of poverty.
Danone has been operating in 45% of the developing world, providing its yogurt, water and baby food. Yet they had not been able to enter Bangladesh while remaining financially viable. So they partnered with Grameen, who had the important local relationships and footing on the ground for almost 25 years. The goal was that Grameen could help Danone create a unique community-based business model.
That’s the critical first step. When we enter into a new territory in Corporate Social Responsibility, we need to partner. Partner, partner, partner… we can’t do it alone. This is especially true if we are going global.
Those of us who are involved in CSR know we need to have experts on the ground. It’s important to establish local buy-in, which can take years of relationship building. And we need to have experience, or rely on those who do. It may sound bland, but these are the day-to-day lessons learned which help us hone our products, services and CSR programs in way that is relevant to the community.
Here’s where we can help each other create winning partnerships. It can be “for-profit/for-profit” partnerships, “nonprofit/nonprofit” partnerships, or in this case, “for-profit/nonprofit” partnerships.
So to do this right, Danone and Grameen entered into a new venture, together. They didn’t just pool their current resources or relationships. It was not just a press release. It was not the famed “collaboration” which sounds all too benevolent, but may lack substance.
Danone and Grameen Venture into a Zone of 40% Poverty
Forty percent of Bangladeshis live in poverty, with an annual income of $497 per year. Bangladesh has one of the highest child and maternal malnutrition rates in the world. One-third of its people and 45% of its children under five suffer from moderate to severe malnutrition.* That makes the Bangladeshi community even more susceptible to sickness, poor eye conditions, and stunting, making them less able to work and study.
Danone and Grameen’s tack was to go big. Their mission was to reduce poverty by providing nutrition to the poor of Bangladesh through a unique community-based model. Their initial goal: to set up a yogurt producing company in a plant near Bogra, Bangladesh. That’s the first point: The production space was locally based and relevant to the people they were serving.
Next, they worked on a compelling, meaningful brand. The yogurt was branded under Grameen Danone Foods Ltd as “shokti,” meaning “strength” in Bengali. One cup would provide 30% of a child’s recommended daily nutrients, and it was marketed at a price even the poorest could afford.
Thirdly, they funded it with equal commitment: Both provided funding. It wasn’t the traditional ‘corporation donates to a nonprofit.’ In a similar vein, profits are reinvested in the company and the market prices are set to make the enterprise self-sustaining.
It’s the Global Thinking … That Goes Beyond
Here’s where Grameen and Danone really took their partnership to the next level. They addressed all these complex global factors we’ve discussed. But then they took an even greater step to integrate themselves into the local community through more sensitive measures: job opportunities, green initiatives/solar energy and social investment.
Grameen Danone Foods focused on a community model that maximizes job opportunities and offers competitive wages. It purchased its milk from nearby micro-farmers and distributed the yogurt door-to-door with the help of local, rural saleswomen. In the 30 km radius of its Bogra plant, Grameen Danone Foods provides 1600 jobs. Their partnership is also committed to environmentally sustainable practices, such as creating packaging which is biodegradable; the plant uses solar energy.
A unique aspect is their social investment setup: Danone Communities is a fund offered by Credit Agricole. The fund is open to any investor. And instead of providing an immediate return, up to 20% of profits are invested in social businesses, such as the Danone plant in Bogra. Here’s a great way for a company to think about funding a socially impactful idea, which also has the necessary bottom line impact.
Danone and Grameen have partnered in a way we need to scale across the world. It can start small in one local community. Try out the partnership…and find out what works and what doesn’t. Do your best to make it locally relevant. Refine, redo and launch your program again with lessons learned. Then you can scale profitability, and have a social impact across the world. Smart forprofit-nonprofit partnerships such as these pay off.
* Torlesse, Harriet. UNICEF. “Child and Maternal Nutrition in Bangladesh.” 2007.