Social Business in Bangladesh: A Study on Grameen Danone Shokti+ Yogurt ()
1. Introduction
The concept of social business was first proposed by the noble laureate professor, Dr. Muhammad Yunus. A social business is a financially sustainable organization whose sole purpose is to address a social issue [1]. Social business is not a for-profit venture; instead, it seeks to solve a social problem through business. Its ultimate goal is to solve social problems, especially poverty related [2]. Therefore, the role and contribution of social business to sustainable development are critical, as social business contributes to human development by broadening people’s choices in an economically, environmentally, and socially sustainable manner [3]. Furthermore, a social business has the potential to be a global change agent [4].
Social businesses can be classified into type I and type II [5]. The social business type I is a non-loss, non-dividend business dedicated to solving social problems. It is owned by investors who reinvest all profits in expanding and improving the business. Grameen Danone Foods Ltd. is an example of type I social business. Type II Social Business is for-profit making company that poor people own, either directly or through a trust, and is dedicated to a specific social cause. In this type of social business, profits are automatically serving a social cause because they are directed toward poor people. Grameen Bank is an example of this type of social business [6]. However, this article focused on “Grameen Danone Foods Ltd. (GDFL)” as a case of social business.
Grameen Danone Foods Ltd. (GDFL) is a joint venture between the Grameen Group of Bangladesh and Groupe Danone, a French conglomerate. An informal meeting between Frank Riboud, Chairman and CEO of Groupe Danone, and Professor Muhammad Yunus, Chairman of Grameen Bank, in October 2005 in France prompted the idea of launching the joint venture. As a result, Grameen Danone Foods Ltd. was founded as a social business enterprise on March 16, 2006 [7].
GDFL’s mission in Bangladesh is to combat malnutrition and poverty while also making a positive social impact throughout its value chain. GDFL was founded to supply a variety of essential nutrients that are generally missing in the diets of children in rural Bangladesh. One in every two Bangladeshi children suffers from malnutrition, making it difficult for the children to acquire their full physical and mental potential. Therefore, Grameen Danone Food Ltd. developed the fortified Shokti+ yogurt to bring improved health through better nutrition to the poorest children of Bangladesh. The word “Shokti” means “energy” or “strength”. Shokti+ yogurt is enriched with various micronutrients that help children meet their nutritional needs. It contains micronutrients zinc, iron, vitamin A, and iodine. It also contains a natural source of calcium and protein. A 60-gram cup covers 30% of children’s daily nutrient needs (Table 1). The micronutrients can bring several benefits to children’s health (Table 2). For example, an efficacy study conducted by [8] found that consumption of Shokti+ improved the hemoglobin level of children who were previously iron deficient. Based on this efficacy research, GDFL advises to consume the yogurt at least three times per week [9].
To achieve the social objective of reducing poverty and creating employment opportunities, GDFL employs residents of nearby villages. Small dairy farmers sell their milk to the GDFL and get a price premium, and women with limited financial resources earn from the sale of this yogurt to the local communities [10]. Thus, local people generated income by involving GDFL. However, GDFL does not take any of the company’s profits. Instead, they used these funds to create new opportunities for people’s welfare and development. Hence, it is known as a “social business”. As a social enterprise, Grameen Danone adheres to the basic principle of self-sufficiency. Therefore, the GDFL stay committed to never taking a dividend that exceeds the return on their initial investment. Each year, the company’s success is measured not by the amount of money invested but by the number of children saved from malnutrition.
GDFL has been doing social business in Bangladesh for over a decade by selling Shokti+ yogurt. This study depicts various demand and supply-side aspects
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Table 1. Nutritional composition of Shokti+.
In addition, contains: whole milk, date molasse, sugar starch, Aspartame, Acesulfame K, Danone yogurt culture, micronutrient premix. Source: [8].
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Table 2. Shokti+ benefits for children health.
Source: [11].
of GDFL’s Shokti+ yogurt business. For a supply-side overview, the study described the yogurt processing and distribution channels, the actors involved in distribution, and how the actors benefit from involvement in the Shokti+ yogurt distribution. Since GDFL’s primary social goal was to reach Bangladesh’s poorest children, other critical supply-side question was whether GDFL successfully reaches Bangladesh’s poorest children to a large extent. The respondent households’ calorie intake status was assessed to answer the questions, which revealed the Shokti+ yogurt consumers’ poverty level. Concerning the demand side, the study tried to answer some critical questions: Are the poor consumers satisfied with the yogurt quality, availability, price, and convenience? Are they recognizing the nutritional value of the yogurt? Therefore, the study assessed the consumer perceptions of Shokti+ yogurt. The study also identified the problems confronted by the Shokti+ consumers and proposed potential solutions to popularize Grameen Danone yogurt Shokti+ in Bangladesh. This study will provide improved understanding on the “social business” concept that will enable social entrepreneurs, business leaders, policy makers and development agencies to implement effective viable social business enterprises.
This article begins with an introduction to social business, followed by a description of the GDFL and its mission. The remainder of the article is structured as follows. The second section outlined the methodology. The third section presented the results and discussions. The results and discussion section mainly focused on two parts. The first parts provide an overview of Shokti+ yogurt processing, distribution, and margin received by distribution actors. The second part presents Shokti+ yogurt consumers’ socio-economic characteristics and their calorie intake status, consumers’ perception of the Shokti+ yogurt, and problems faced by the consumers. Finally, in the last section, conclusions are drawn. Recommendations are made to popularize the Shokti+ yogurt among the consumers, which will aid in the smooth operation of the GDFL social business to reduce malnutrition and poverty in Bangladesh.
2. Material and Methods
2.1. Study Area and Sampling
To fulfill the purpose of the study, the Bogra district of Bangladesh was purposively selected since the Grameen Danone yogurt plant is located here. Furthermore, there are a large number of Shokti+ yogurt consumers in the study area. The survey was conducted in three Upazilas (sub-districts) namely Sariakandi, Gabtali, and Kahaloo (Figure 1) of Bogra district.
From each Upazila (sub-districts), 20 consumers were selected. Therefore, a total of 60 consumer households were chosen from the three Upazilas (sub-districts) for the study. Consumers were chosen through a convenience sampling among these Upazilas (sub-districts) for the current study because everyone in the selected three Upazilas (sub-districts) consumes Shokti+ yogurt.
2.2. Data Collections and Analytical Techniques
Prior to the final survey, a draft survey schedule was prepared and pre-tested among a few consumers and was modified based on the findings. Primary data were collected through face-to-face interviews with respondents using a semi-structured questionnaire with open and closed-ended questions. The data collection was conducted from July to September 2018. Secondary data and information were gathered through a review of relevant literature to gain background knowledge on the study. Personnel from the GDFL factory were interviewed to know the Shokti+ yogurt production and distribution process. After each interview, the schedule was checked and verified to ensure that all answers were properly recorded. Following the inspection of all schedules, they were entered into the Microsoft Excel data sheet. Finally, the data were analyzed using descriptive statistics such as mean, percentages, and frequency tables.
3. Results and Discussion
3.1. Shokti+ Yogurt Processing
Shokti+ yogurt is produced from fresh milk acquired from local dairy farmers. Farmers deliver their milk to the collection facility. Then raw milk is carried to a chilling station and from the chilling station to the factory (Figure 2). GDFL mixes nutritional supplements in the milk when processing. The nutrient supplements are imported from Europe. GDFL also mixes the date palm molasses as the sweetener [12]. GDFL also added flavors such as mango and strawberry in the yogurt along with regular flavors. The yogurt is then packaged in various sizes of plastic cups.
3.2. Shokti+ Yogurt Packaging and Price
Shokti+ is typically sold in 60 g and 80 g cup sizes. Shokti+ 60 g cup is commonly sold in rural and low-income markets, whereas 80 g is sold in high-income markets in Dhaka and Chittagong. Previously, GDFL exclusively supplied 60 g Shokti+; however, to compensate for the costs of distribution to low-income markets, GDFL began distributing larger 80 g pots of Shokti+ to high-income markets in Dhaka and Chittagong city. Therefore, the product is packaged differently and with a price premium for rural low-income and urban high-income markets [9]. The yogurt requires refrigeration and has 22 - 25 days of shelf -life. Without refrigeration it needs to sell within 72 hours.
In the beginning, the price of each 60 g cup was fixed at BDT 5 (US$0.07). In 2010, a 60 g cup was sold for BDT 6 in rural markets, and an 80 g cup was sold for BDT 8 in local city stores and BDT.15 in Dhaka, Bangladesh’s largest city. In 2018 its selling price per 60 g cup was BDT 10 in the local area, and at the super shop, BDT 35 and 80 g cup was BDT 35 in Dhaka and BDT 28 at the super shop in other cities.
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Figure 2. Supply channels of raw milk and distribution channels of Shokti+ yogurt.
3.3. Distribution of GDFL Shokti+ Yogurt
The GDFL Shokti+ yogurt manufacturing plant is located in Betgari, near Bogra town, about 220 kilometers northwest of the capital, Dhaka [7]. When the factory first opened in 2006, a proximity-based model was implemented to target a 30-kilometer radius around it. In 2009, GDFL realized it could not survive solely in rural areas, so it expanded distribution to Dhaka, Chittagong, and Sylhet. However, they stopped distributing to Sylhet in 2010 because maintaining the cold chain was too difficult. Currently, the distribution model is 30% based on proximity and 70% focused on urban areas. There are mainly four channels for Shokti+ yogurt distribution: 1) modern model, 2) urban trade, 3) rural trade, and 4) Direct Trade. Figure 2 depicts the distribution channels of Shokti+ yogurt.
In the modern model, super shops are the key actors. First, the super shop buys the product from distributors. Distributors collect the product from the GDFL factory directly at a lower price than their selling price. Distributors pay GDFL directly on a cash basis for the product. The distributors hire a CNG driver to pick up the ordered product from the factory and transport it to the distributor’s warehouse in the cities. Then super shop purchases the yogurt from the distributors. Finally, urban and peri-urban consumer of Shokti+ yogurt gets it available at their nearby super shops. The second channel involves urban retail stores. Retail stores also get Shokti+ yogurt from the distributors, like super shops. Then urban retail stores sell it to consumers. Urban retail stores are often called confectionary.
The third channel is rural trade, which works through two actors. One is Danone lady, and the other is rural retail stores. Retail stores get their product from sales officers, while Danone lady buys from rickshaw van sellers (RVS). At the initial stage of GDFL, Danone ladies were a key actor in the GDFL business model and the primary distribution network in the rural region. Many of whom had worked with other Grameen enterprises. The ladies distribute Shokti+ yogurt daily to households in their communities. Using micro-credit, the ladies procured the products from rickshaw drivers, called rickshaw van sellers (RVS), on a daily basis. Each RVS serves 10 to 15 ladies per day. In turn, each RVS is served by a CNG driver who picks up product from the factory and transports it to rural locations. Each CNG driver serves 4 to 5 RVS. The fourth channel supplies yogurt directly to urban retail stores or confectionaries from the GDFL factory. Like Shokti+ ladies, retail shops earn a profit margin per cup sold. GDFL pays sales staff, RVS, and CNG drivers.
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Table 3. Margins received by distribution actors.
Source: Field survey, 2018. *Margin was estimated based on 60 g cup of Shokti+ yogurt.
Urban distributors received a margin of 0.07 BDT. Other actors, such as retail urban and rural shops and Danone lady, received the same margin of BDT 1 by selling the Shokti+ yogurt. Margins received by Shokti+ yogurt distribution actors are presented in Table 3.
3.4. Socio-Economic Characteristics and Calorie Intake Status of the Respondents
The sampled consumers’ major socio-economic characteristics are presented in Table 4. It shows that about 38% of respondents were below 30 years old and about 45% of respondents were between 30 - 40 years. About 17% of respondents were between 40 - 50 years old. The survey results revealed that there were few illiterate respondents, and the number of respondents who could sign only was also few among the respondents. About 22% of respondents had primary education. A higher number of respondents had a secondary level of education which was about 48%. In contrast, about 25% of respondents had above secondary education.
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Table 4. Socioeconomic characteristics of the respondents.
Source: Field survey, 2018.
The findings showed that most families (73%) were composed of 4 to 6 members, which were medium-sized families. About 20% of families were composed of 1 to 3 members, categorized as small families. Only 7% of respondents’ families were large, composed of more than 7 members. It was found that the maximum number of respondents were women, especially mothers of Shokti+ yogurt consuming children. Results revealed that the majority of respondents (65%) were housewives. About 12% of respondents were involved in Govt. jobs. It was found that the average annual income of the respondent households was about BDT. 319,700. Whereas the annual household expenditure was BDT. 198,000 of the respondent households.
An important objective of the study was to determine the respondent households’ per capita calorie intake level to know whether the GDFL is reaching the poorest consumers, whether poor or non-poor consume Shokti+ yogurt. To achieve the objective calorie intake status of the sampled households was assessed. To assess the calorie intake level of the sample households, the consumption data of selected households for seven days was measured by per person per day calorie intake level. Each food item consumed by the family members of the sample households was converted through a standard value of 100 gm for each food item. For the calculation, family members are defined as one adult male and one adult female is 1:1, the child whose age is below 5 years is considered zero, and 5 - 10 years is considered half of an adult member. A structured question including all commonly consumed food items was developed to measure the weekly calorie intake level by the Shokti+ yogurt-consuming households. Based on the amount of food taken by the respondent and their family members, per capita calorie intake was measured. It was classified into the following four categories i.e.: ultra-poor (<1600 k. cal.), hardcore poor (<1805 k. cal.), absolute poor (<2122 k. cal.), non-poor (above 2122 k. cal.) [13]. In the survey, no respondents belonged to the ultra-poor category. About 3% of respondents belonged to hardcore poor whose average per person per day calorie intake was 1689.005 k. cal. About 13% of the respondents belonged to the absolute poor group having an average per person per day calorie intake of 1909.924 k. cal. The rest, 84% of the respondents, took above 2122 kilo calories, and the average calorie intake level was measured at about 2447.971 (Table 5).
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Table 5. Categories of respondent according to calorie intake.
Source: Field survey, 2018.
The findings revealed that poor households consume less than non-poor people and lagged in receiving the yogurt’s nutritional benefits. Poor consumers consume less because the GDFL may not successfully reach children from poor households as they planned. Furthermore, lack of awareness and affordability could be the key factors in poor households’ lower consumption of Shokti+ yogurt. [9] found that low-income (1,818 BDT weekly) and un-aware households bought fewer Shokti+ than high-income (2,807 BDT weekly) households. [9] also found that the Shokti ladies did not target low-income households to sell the yogurt in the study areas. Therefore, GDFL cannot reach the children of the poorest households. However, the product has enough prospects for capturing both poor and non-poor consumers as it is evident that Shokti+ yogurt enhanced consumers’ nutritional status.
3.5. Consumer’s Perception of Shokti+ Yogurt
Shokti+ yogurt has been socially and culturally acceptable to its consumers. The following are some aspects of consumer’s perception of the Shokti+ yogurt:
Perception about the yogurt quality and availability
Product quality and availability are both important factors in consumers’ satisfaction. About 78% of respondent opinion was satisfactory about the quality of GDFL yogurt. Whereas, about 22% of respondents were dissatisfied with the quality of GDFL Shokti+ yogurt. They mentioned the “extra liquid” yogurt they had ever seen, which was only a little thick than liquid milk. Shokti+ yogurt was not like that liquid when GDFL started its journey. The quality and taste of Shokti+ yogurt was superior to ordinary yogurt. However, its quality is deteriorating day by day, thereby declining its popularity among children and their parents.
The majority of respondents (95%) showed satisfaction with the availability of Shokti+ yogurt because it is widely available in the market. About 2% of the consumer was highly satisfied. No respondent had a negative opinion of its availability, which indicates their distribution channel is smooth and planned enough. The respondents’ perception of yogurt quality and availability is presented in Table 6.
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Table 6. Perception about Shokti+ quality and availability.
Source: Field survey, 2018.
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Table 7. Perception about Shoki+ yogurt price.
Source: Field survey, 2018.
Perception about convenience
In this study, consumers were asked, “How convenient Shokti+ yogurt is?”. About 100% of respondents gave a positive answer. Therefore, the packaging, labeling, and design of Shokti+ yogurt are satisfactory.
Perception about price
Price throws a considerable impact on consumers’ perception. Consumer’s opinion toward price was mixed, which is presented in Table 7. The majority of the respondent (58%) claimed that the price is higher than the amount and quality offered. Therefore, they demanded a lower price or a greater amount and quality. About 20% of respondents said that the price is moderate and the other 20% said that the price is low. About 2% of respondents gave no opinion about the price of Shokti+ yogurt.
Perception about the nutrient level
People in the study area regard Shokti+ yogurt as a nutrient-dense dairy food that promises to meet approximately 30% of a child’s daily nutrient requirements (3 - 12 years old). According to 83% of respondents, the nutrient content of Shokti+ yogurt distinguishes it from regular yogurt. However, the remaining 17% believe Shokti+ yogurt is superior to regular yogurt in taste. In addition, approximately 63% of respondents eat Shokti+ yogurt for the taste rather than the nutrition, and 37% eat Shokti+ yogurt for the nutrition rather than the taste.
3.6. Problems Encountered by Consumers
The primary objective of GDFL was to combat the widespread problem of malnutrition in rural Bangladesh through the production and sale of fortified yogurt called “Shokti+ yogurt.” The yogurt was priced well below the market price for unfortified yogurts in Bangladesh, making it more affordable for low-income consumers. However, after a few years, when input prices rose sharply, GDFL had to raise its product’s price to meet production costs, leaving the poorest consumers unable to purchase yogurt. The poor or extreme poor households find it nearly impossible to purchase the minimal quantity of Shokti+ yogurt each week and are also highly price sensitive [14]. The study presented some claims of consumers toward Shokti+ yogurt. The major problems identified by the respondents are highlighted below:
1) Extra liquidness in the yogurt;
2) Increase in yogurt price;
3) Consumers lack confidence in the nutrient content of Shokti+ yogurt;
4) The amount of yogurt inside the cup is also decreased, and a considerable portion of the cup remains filled with air instead of yogurt;
5) Children find it inconvenient while consuming the yogurt due to its extra liquidness;
6) Retailers are unwilling to preserve the yogurt in the refrigerator. Because they think Shokti+ yogurt does not give them enough profit as other refrigerated foods like soft drinks, ice cream, etc.
4. Conclusion and Recommendations
Social business benefits the masses. Social business has various goals and objectives, such as creating new jobs, eliminating poverty, improving living standards, inventing new products and services, enhancing local communities, and giving people more power to feel encouraged and change their lives. GDFL is striving to achieve all of these objectives. As a social business enterprise, GDFL’s primary goal was to fight the widespread problem of malnutrition in rural Bangladesh by producing and selling fortified yogurt branded “Shokti+ yogurt”. However, GDFL has broader socio-economic effects in addition to lowering malnutrition. On the supply side, it supports small local farmers by buying their milk, and on the distribution side, it provides work and empowerment for the “Grameen Ladies” who sell Shokti+ yogurt in rural areas. The study found that Shokti+ yogurt is distributed through four key channels: modern model, urban trade, rural trade, and direct trade, and all distribution actors received the same margin except for urban distributors. The findings revealed that not only poor but also non-poor eat Shokti+ yogurt due to its nutritional value and availability. This result indicates that the prospects of Shokti+ yogurt in Bangladesh are sufficiently appealing. However, poor households consumed less than non-poor households; this could be because GDFL has not successfully reached the poorest families to a large extent.
The findings of consumer perception revealed that about 78% of consumers were satisfied with the quality of the yogurt. Similarly, most consumers (95%) expressed satisfaction due to its availability. About 58% of respondents perceived that price is higher than the amount. The respondents were satisfied with the yogurt’s packaging, labeling, and design. According to 83% of consumers, the nutritional content of Shokti+ yogurt distinguishes it from regular yogurt. However, only 17% of consumers perceived that Shokti+ yogurt is superior to regular yogurt. The findings suggest that more consumers need to be educated about the nutritional benefits of Shokti+ yogurt through various awareness-enhancing activities. The study found that consumers of Shokti+ yogurt identified several problems, including excessive liquidity, price rises proportionally to the quantity offered, a lack of trust in nutritional quality, etc. Respondents also stated that retailers do not keep Shokti+ yogurt refrigerated. Thus, the quality of the yogurt degrades. Because of the problems mentioned above, the popularity of Shokti+ yogurt is declining. However, it is still a nutritious and delightful food for consumers. Additionally, the prospects of Shokti+ yogurt in Bangladesh are quite appealing because both poor and non-poor people consume it. Therefore, the study recommends the following steps to popularize Shokti+ yogurt among consumers:
1) The yogurt should be made more consistent, as respondents claimed that it is now more liquid in consistency than before. The amount of yogurt in the cup should be increased because the respondents reported that a significant portion of the cup is filled with air rather than yogurt;
2) Effective marketing and pricing strategies should be implemented to reach more poor households since poor customers consume less yogurt than non-poor consumers and make the product more affordable to low-income consumers;
3) In addition to marketing strategies, consumers’ knowledge of the nutritional benefits of Shokti+ yogurt must be raised through promotional initiatives such as advertising on various social media and platforms;
4) To assure consumers about the nutritional value of Shokti+ yogurt, GDFL may undertake various efficacy studies on the yogurt’s dietary benefits and publicize the results to promote the yogurt;
5) Children feel inconvenient to consume yogurt due to its increased liquidness. GDFL may include a spoon with the yogurt to make it easier for children to eat. It will also ensure hygienic conditions while eating yogurt;
6) GDFL may concentrate on the value addition of Shokti+ yogurt through more innovation, color, and flavor to attract the value-seeking consumer segment in Bangladesh;
7) To ensure the cold storage of Shokti+ yogurt, the GDFL may provide local retail sellers with a dedicated refrigerator, as ice cream companies do. As a result, local retail sellers will be obliged to keep Shokti+ yogurt in the designated refrigerator. Furthermore, a separate refrigerator with the GDFL logo will aid in capturing the consumer’s attention;
GDFL may implement the suggestions mentioned above to popularize Shokti+ yogurt among consumers, which will benefit GDFL in the smooth operation of their social business to reduce malnutrition and poverty in Bangladesh.