Danone's joint venture strategy bogged down in strife

The case highlights Danone's continuing legal difficulties in expanding into new and emerging markets, a strategy often executed through agreements with local partners.

The results of the action could also have significant implications for future investment in the country's market for dairy goods, with the Danone recently announcing a $100m investment programme in Colombia over the next few years.

Danone, which operates a joint venture in Colombia with local group Alqueria, said Wednesday it had filed a claim in local court alleging the company had breached its trademarks by mimicing its products.

The action follows failed attempts at a friendly settlement with Alpina, Danone claimed.

Through its Danone-Alquerí subsidiary, the global dairy giant alleges that Alpina, which is currently the market leader for yoghurt production in the country, has plagiarized its products, trademarks and TV commercials.

According to Danone, examples of the alleged imitation include what it called "evident similarities" between Alpina's Yox brand and its own Actimel products.

The company also pointed to Alpina's registration of trademarks for Alpina Activ' and Alpina Activo, which it says could be introduced as an imitation of its Activia brand.

Alpina was unavailable for comment at the time of publishing.

Danone announced it had entered into a joint venture with Alqueria in February, in a bid to boost its sales of fresh dairy products in the country.

Danone says that the action is a vital step to ensure legal guarantees of fair competition in the country as well as protecting its investment.

Trademark problems are often encountered by all industries attempting to penetrate emerging markets.

Whether successful or not, the case marks yet another setback for the company's partnerships into foreign markets.

In June, the Indian government informed Danone that it needed permission from local partner the Wadia group before it could sell its brands separately within the country.

The government referred to Press Note 1, a piece of legislation relating to foreign companies that work with an Indian group in a joint venture.

Foreign operators must get permission before operating independently, according to the Business Standard.

The decision came on top of a number of disagreements between the two parties over Danone's investment in local nutraceuticals company, Avesthagen, and some royalty payments relating to other ventures.

The difficulties in India mirrored a bitter fall out between Danone and a Chinese joint venture partner Wahaha, with which it is currently locked into a court battle over alleged breaches of contract.

Earlier this year, Wahaha criticised its partnership with Danone for preventing the company from manufacturing goods that compete directly with products released through its joint ventures with Danone.