Social Business

The world’s smallest yogurt factory

I heard about 6 months ago about the ingenious idea of Muhammad Yunus, founder of Grameen Bank and recent Nobel Peace Prize winner, to build a new yogurt business in Bangladesh.

The first factory just opened near Dhaka as part of a new venture called Grameen Danone Foods. The mini-factory produces a yogurt called Shakti-da (which means “yogurt with strength”) which is fortified with vitamins to address malnourishment. And each yogurt helping with be inexpensive … about 7 cents per cup … which affordable even for the poor.

The story I’ve heard goes something like this … Danone (major yogurt maker) CEO Franck Riboud was sitting next to Yunus at a lunch in Paris in the fall of 2005 and had asked Yunus to explain to him about microfinance and the Grameen Bank. At the end of the conversation, Riboud asked Yunus, “how might I help you?” Now this is a very dangerous question to ask Yunus! Yunus responded, “I’d like you to send your chief yogurt factory designer to Bangladesh to meet with me.” Riboud agreed. A short while later the Danone factory designer chief showed up at Yunus’ office in Dkaha to find out how he could help. Yunus said, “I’d like you design and build the world’s smallest yogurt factory to operate here in Bangladesh.” The factory designer said, “But, I design the world’s largest yogurt factories, not the smallest.” Yunus responded, “I need you to design the world’s smallest one. I’ll be here if you want to go off and think about it and come back later.” So, the factory designer left and went back to his hotel room. A little while later, he appeared back at Yunus’ office with the sketchings for an idea. And the venture was born…

This is setup as a for-profit, social enterprise joint venture between Danone and Grameen Bank. Danone is contributing $500,000 of seed capital. The plan is to re-invest all profits with the exception of paying back Danone their initial seed capital. The factory will buy milk from Grameen Bank microvenders (who’ve been financed by Grameen Bank to buy cows) and microentrepreneurs will sell the yogurt door-to-door. Each factory will employ 15-20 women directly and up to 1,600 people in an area. And the enterprise is designed to environmentally friendly using biodegradable cups made from cornstarch, solar panels for electricity generation and rainwater collection vats. If the first factory is successful, they have plans to launch 50 more in Bangladesh and then who knows where.

There is a good write-up of the story in Fortune magazine called Saving the world with a cup of yogurt.

Please post comments about other social enterprises you have heard about.

5 thoughts on “The world’s smallest yogurt factory

  1. I think ventures such as this that piggy back on top of a microfinance institution will be more impactful in the long run than the small loans of microfinace themselves. Particularly because of the employment created and the higher quality consumables that will be made available to the poor. The fact that Grameen gives loans to women for cows and then buys back the milk reminded me of a relationship between FINCA and as FINCA’s borrowers can use their loan to buy the Honey Care business package and then Honey Care will buy back the honey.

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  2. Thanks for this wonderful post. I live in the DR and work with issues of Haitian development – there is a great little yogurt project there- Lait agrogro under Verterimed.org which I am hoping to get some help for from the Haiti Diaspora. I cross posted a link to this article.

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  3. Seed capital is 500 000 USD for a world’s smallest yoghourt factory? With this amount, the medium sized yoghourt factory can be done !

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