Yakult to set up research centre in Belgium
research centre outside of its home market in Belgium this year,
demonstrating a commitment to the European market.
The centre, scheduled to open in April, will be built at a science park in Ghent at an initial cost of €2.5 million.
It is designed to offer scientific support for the European operations, in a similar way to the Yakult Central Institute for Microbiological Research, set up in Japan in 1955.
"The basics of probiotics have been laid in Europe and the concept is accepted in the scientific world, so it is time to build up our scientific base in the region," said a Yakult Europe spokesperson.
Europe remains one of Yakult's smaller markets, generating sales of €67 million in fiscal 2004, or 576,000 bottles of the fermented drink daily, compared to more than 9 million bottles being produced everyday in Japan.
However the region has seen explosive growth in probiotics in recent years - probiotic drinking yoghurt has been the fastest growing dairy product in the last five years, according to Euromonitor research, with a 52 per cent growth in probiotic 'little bottles' during 2003 giving them a retail sales value in the core European markets of £28 million.
This compares to a decline in plain and natural yoghurts of almost 2 per cent.
Yakult, which entered Europe via a new plant in the Netherlands in 1994, saw sales in the region increase by 14.8 per cent during 2003, with an 18.9 per cent increase in the UK, the biggest of its four markets.
But there are signs that it is finding it increasingly hard to compete with the might of Danone and some of the newer players on the market. The company has lost global market share in fermented and probiotic drinks since 2001, falling three percentage points to 38 per cent.
And in Belgium and Germany, competition and the flood of me-too products has driven volumes down, leading to a drop in sales of around 10 per cent in both markets.
The company shows no signs of changing its strategy in Europe however and remains heavily focused on communicating the science around its fermented drink.
Science is set to become increasingly important in the probiotics sector under forthcoming European legislation for health claims that will require higher standards of evidence to support marketing claims. It is also becoming a key selling point for cultures suppliers as they look to hold onto their share of a market becoming dominated by the consolidating dairy companies.
Yakult says its new research centre will study the intestinal microbial flora of Europeans and investigate how its products can be better formulated to improve gut function among Europeans.
The bacteria present in the gut is known to differ in different populations, influenced by diet and lifestyle.
The move suggests that the company is prepared to modify its unique product to meet European needs. Whether it will be enough to compete with the region's increasingly powerful dairy groups remains to be seen.