France's Danone and Japan's Yakult will continue their strategic alliance involving closer cooperation on R&D and entry into new markets, maintaining their positions as leaders in the probiotics market.
The strengthening of the alliance will see two more Danone executives sitting on the Yakult board, bringing the Danone presence up to four. But Danone will not be increasing its shareholding in Yakult, the two companies confirmed.
Danone is already the largest shareholder in Yakult with a 20 per cent stake.
Danone's first 5 per cent stake in Yakult, bought in 2000, did little to improve cooperation in the probiotics sector. When Danone upped its stake in Yakult to 20 per cent in April 2003, buying €300 million in shares on the open market, the Japanese firm faced speculation that its shareholder would attempt a hostile takeover bid.
Both companies have now announced that Danone will maintain its stake at 20.02 per cent until 2012.
"The steady strengthening of this cooperation backed by a permanent liaison bureau had made for a climate of trust that Groupe Danone and Yakult Honsha now wish to reinforce through even closer ties at the highest level of their organisations," stated Danone.
The partnership will include the establishment of joint ventures in Vietnam and India, and the founding of a Global Probiotic Council.
"Building on these new bases, the partners will be accelerating the pace of co-operation, particularly in research," stated Danone. "In this spirit, Yakult Honsha has just granted Groupe Danone's Daniel Carasso Research Center a license for its YIF-Scan, a unique, high precision system that quantifies bacteria, targeting gene sequences (RNA and DNA) specific to particular intestinal bacteria."
Sales in probiotics are growing rapidly, as consumers become increasingly aware of the importance of gut health. In Europe, dairy is the biggest area for human food applications. Probiotics are set to reach $137.9 million (€118.5m) in 2010 in Europe, with the US market projected to reach $394 million, according to Frost & Sullivan.