Silvia Dávila, Regional President Latin America, Danone Dairy • Interview

Danone Mexico is continuously churning out new innovative products, introducing plant-based offerings, and nurturing the country’s small milk producers through its social projects.

What strategies is Danone Mexico using to maintain popularity and hold consumers' interest in Mexico?

Customers’ attention spans are getting shorter. We used to make 30-second commercials, and now we only have six seconds. We are active in the digital environment. Obviously, we are investing in getting quality data, so we can become closer to our customers. Today, we do not talk about consumers; we talk about demographic “tribes.” We speak differently about the same brand to different tribes, such as vegans versus high-performance athletes. At Danone, we are careful that our brands have a clear umbrella, message, and social agenda. Then, we break our audience down with key messages that make our products relevant to them. In terms of maintaining growth, our strategy is more innovation. One of the things we have learned is that innovation cycles are much shorter than previously. Once you have something out there, you better be ready to change yourself, rather than be changed by the market.

Why is Mexico such an attractive market for plant-based products?

Mexico is the only country in Latin America where there is a plant-based business. In Brazil, we are on a growth trajectory, but it is still small. In Argentina and Uruguay, where we have just introduced it, the category is pretty much non-existent. Mexico tends to get new things because of its proximity to the US. American-made, plantbased products are well-established. This category started in Mexico around 10 years ago. Danone acquired Silk in 2017. We measure penetration in terms of how many households are using a particular category of product. In Mexico, penetration for plant-based products is still small, with only 10% of Mexican households buying a plant-based product once a year.

What strategies are you using to increase household consumption of plant-based products?

First, we are diversifying the number of flavor options we offer. We started with almond and soy, and we now have coconut, oat, and mixed nuts. Plant-based products are an acquired taste, as people are not used to them. We are also starting to offer a wider range of products. We started with milk, but now we have both “spoonable” and drinkable yogurt. We are introducing ice cream and ready-to-drink coffee options. By amplifying the number of options we offer, buying this category of products becomes more natural.

What other new products is Danone Mexico launching in 2019-2020?

In 2019, we launched a high protein brand called YoPro, both a dairy and plant-based version, designed for people who exercise on a regular basis. In Mexico, there is a high rate of lactose intolerance and many people who do not want dairy in their diet. It is challenging for vegans to get enough protein, so we have developed a formula using a combination of soy and chickpeas. At the same time, we are overhauling a number of our existing brands. We are also launching a line of yogurts inspired by fruits from Mexico’s many regions. These yogurts will be made by Mexican milk, our own natural cultures, and a touch of agave, to make a unique Mexican product. We are also continually improving Activia, with our new Activia Shots containing 2 billion probiotics in only 100ml. In kids' products, we launched jelly pouches under the Dany brand and even have a spicy version that caters to the Mexican market.

What actions are being implemented under Danone's One Planet One Health campaign?

A great local example is the Margarita Project, which has developed practices to make small milk producers profitable. Today, 18% of the milk we buy comes from those Margarita farmers. We just signed a contract for Bimbo to join us in the development of this project. We have also started a scheme to help small farmers who grow the strawberries we use in our products here. These are two examples of where we actively lead the One Planet agenda. ✖

for us because we carry out worldwide delivery of the Q5 from here. Thanks to NAFTA, 50% of our production goes straight to the US. Additionally, Mexico has trade agreements with many countries. Mexico has made a great base for us because of its experience following Volkswagen starting 50 years ago here. Mexico has huge automobile industry with many experts and trained workers. Mexico was one of our biggest targets for investments. We started with a new plant, a new product, and completely new people. We were one of the first premium suppliers to build a plant in Mexico, making it the first premium car plant in Mexico. In 2018, we had our first year of full production. Our annual capacity is around 150,000 cars, and we reached 500,000 Q5s in Mexico in January 2020. It was an excellent success story of producing 500,000 units of a premium product in three years and two months.

MEXICO IS AN INTERESTING MARKET DEMAND IS CHANGING SIGNIFICANTLY.

In 2018, the industry grew by 9% while Lincoln grew 21%. To date, the industry has shrunk 11% YoY from 2018 to 2019; however, we are optimistic the industry will recover. The luxury automotive market is behaving inexplicably, with sales increasing in 2018, partly due to credit access in the market currently. We are launching new products, and we expect to expand our sales base. We recently opened a new plant in China, and we have our MKZ sedan production in Hermosillo. We have plans to grow, and we hope the market will grow with us. Our plant in Hermosillo has been open for more than 20 years and has been building Lincolns for more than 10 years now. It is the only plant in Mexico that builds Lincoln vehicles; we even build the Lincoln hybrid vehicle here. The cars produced here are shipped to markets all over the world.

that Kia was not present in, with brand awareness at 0.4%. This was shocking, considering our global presence and high volume in the US. We launched the brand with a strategy based on four pillars. One pillar was a strong marketing campaign introducing Kia, our arrival, and our product lineup. We then developed a strong dealer network that covered 99% of the country in less than three years. We then upscaled the brand image with three products: large SUVs (Sorento and Sportage), and Forte, which would later be produced in Mexico. Finally, to differentiate ourselves, we launched the largest warranty in Mexico for 150,000km. Our manufacturing plants also helped significantly; Mexico has one of the biggest Kia manufacturing plants globally. It was a USD3-billion investment that gave us a product made in Mexico adapted to Mexican needs. The Rio, Forte, and Sportage models represent almost 80% of our total sales and have made us the fifth brand in terms of volume.

MEXICO WAS THE ONLY BIG MARKET