By Priya Bapat, Humanitas Global Development
Anyone working in development knows that ideas that seem amazing on paper do not always translate into highly successful programs once implemented. All field programs, particularly new or pilot programs, require a great deal of fine tuning and adjustments to account for unforeseen issues that inevitably arise. Innovative programs that face difficulties in implementation become hard to judge. When is a program worth saving and when is it time to direct funds elsewhere? In this first of two blog posts on the subject, we will examine the case of Grameen Danone and the challenges it faced when operations began in Bangladesh.
Grameen Danone Foods Ltd. was founded by Grameen Bank in Bangladesh in partnership with Danone, a French company well-known for its dairy products. The primary objective of the company was to combat the widespread problem of malnutrition in rural Bangladesh through the production and sale of fortified yogurt called “Shokti Doi” – or strengthening yogurt. The yogurt was priced well below the market price for unfortified yogurts in Bangladesh, making it more affordable for low-income consumers.
When the Grameen-Danone venture was announced, it received near-universal acclaim and was hailed as a ground-breaking partnership. The social enterprise combined the strengths of the private sector and non-profit sector to create a profit-generating business that would also address the major problem of child malnutrition in Bangladesh. In addition to combating rural malnutrition, yogurt production operations would provide numerous jobs to dairy producers, factory workers, and the Grameen sales ladies – women who would operate as local distributors in rural areas. Since yogurt sales were targeted exclusively for the rural population, the Grameen ladies were the only distributors of Shokti Doi.
Despite early praise, there have been some troubling criticisms of the project. While Shokti Doi is more affordable than other yogurts on the market, this did not translate into high sales within the Base of the Pyramid (BOP). This was due to several factors, including the following:
- There are some indications that suggest that yogurt is considered a luxury item and is not regularly consumed by low-income people.
- In South Asia, yogurt is more commonly made in the home rather than purchased from a store.
- Yogurt requires proper storage in order to retain the same level of quality. Although the Shokti yogurt remains safe without refrigeration for a period of time, the yogurt becomes more liquid in consistency and is less appealing to consumers.
- Grameen sales ladies did not treat yogurt sales as a full-time income generation activity, but rather as a source of supplemental income. This could be a result of personal preference, a potential overestimation of the demand for yogurt in the BOP/rural markets or a combination of the above.
As a result, Grameen Danone operated at a loss. The sales lady program was dropped and the yogurt was marketed solely through established retail channels which were located in more urbanized areas, far from the targeted rural demographic.
The case of Grameen Danone is similar to another now infamous project – the Play Pump. In short, the Play Pump was an innovative approach towards improving access to water by combining the water pump mechanism with playground equipment. The project was initially hailed as a revolutionary idea towards ensuring adequate access to water in developing countries and received positive attention from the media and endorsements from high-profile celebrities such as Jay-Z and Kirstie Alley.
Critics, however, accused Play Pump distributors of addressing the wrong aspect of water security – the pumping mechanism. In some cases, the installation of the Play Pump made it more difficult to access water than it had been previously (a video on using the Play Pump versus a traditional hand pump can be seen here). There were countless blogs and articles written on the issue which led to a public admittance by the Case Foundation/Water for People that the project was not as successful as they had initially hoped. They have since drastically scaled back the program and now use the Play Pump technology in specific sites, such as the playgrounds of large schools.
As mentioned in a previous blog post, innovative programs are highly prized in the development community. However, as the Case Foundation CEO Jean Case points out, failures are often treated harshly, which can create harmful results. Organizations are less likely to acknowledge when a project has been unsuccessful and may engage in wasteful attempts to save a project that should rightfully be halted. If we are to encourage creative solutions to development challenges, we must be willing to accept that mistakes can and will be made along the way and promote the opportunity to constructively learn from them.
Grameen Danone, when faced with evidence of the project’s weaknesses, chose to alter the company’s strategy in order to save the program. The Global Alliance for Improved Nutrition (GAIN) is currently conducting a study with Johns Hopkins University to assess the yogurt's impact on health and welfare of malnourished children in Bangladesh. However, a significant challenge for the company is finding a way for the yogurt to reach its intended beneficiaries and having that understanding early on – before programs are implemented. In the next post, we will look at what steps Grameen Danone has taken and what lessons can be learned from their experiences.
Priya Bapat is an Associate at Humanitas Global Development
Photo Credits: http://www.corporate.sipa.com/report/5_envir/DanoneGrameen/DanoneBangladesh-5.jpg