In order to adapt to a new COVID world and return to growth, Danone will restructure its organisation and divest some activities. The company sees vegetable dairy alternatives performing strongly.
Looking at strategic options
Danone is feeling the impact of the corona crisis: in the third quarter, revenue fell by 2.5% on a comparable basis to 5.8 billion euros. The impact of sanitary measures, closed borders and shaky consumer confidence, says CEO Emmanuel Faber in a press release. He wants to return to a growth rate of 3 to 5% as soon as possible and therefore announces some structural measures.
The multinational wants to thoroughly evaluate its portfolio of activities: Danone examines the strategic options for its Argentine division and for Vega, an American brand of vegetable protein drinks. The company may also review other assets. Recently, the group sold its remaining interest in Japanese probiotic brand Yakult in order to free up resources for other priorities.
Vegetable growth
According to Faber, the internal organisation also needs to be overhauled. He appoints two so-called ‘macro-regional’ CEOs to steer the international and North American activities: they have to take local execution to a higher level and look for synergies across categories. There will also be a new COO who will integrate strategically important functions, from research and development through procurement to operations and quality.
Danone suffers from declining sales in the out-of-home channel. The waters in particular are suffering as a result. E-commerce, on the other hand, rose by 40%. Essential dairy products performed well and plant-based dairy alternatives are even growing at double-digit rates. In Europe, Danone was able to gain market share thanks to Actimel, Danette and Alpro.
