(update) Danone is reorganising, resulting in 1,500 to 2,000 office employees losing their job. The FMCG company is transforming into a 'local first' organisation, with fewer management layers and greater local autonomy.
Local food at the centre
The corona crisis is not only affecting Danone's sales and profits; the French dairy producer notices lasting shifts in consumer behaviour: localisation is therefore taking centre stage. CEO Emmanuel Faber calls it a systemic evolution, where local food is seen as an important answer to the risks and uncertainties in the current global food systems. In many countries nowadays, politicians are even pursuing "food sovereignty", according to the chief executive: localisation is a way of regaining control over food.
Danone wants to follow this trend and transforms its organisation into a 'local first' company, with a strategy focussed on locality and based on three pillars: more autonomy for the regions, fewer management layers and an integrated value chain. Instead of management based on category or brand, the company's structure will be based on geographical location. "Our local business units will no longer depend on a specific global category organisation, but will unite into a single local business unit," Faber explains.
Quarter of jobs lost in Paris
For employees, however, it means that around 1,500 to 2,000 will be made redundant in local and global headquarters. At the global headquarter in Paris, as many as a quarter of existing jobs will be cut.
Relocation may also be imminent: Danone wants to bring the Paris office closer to the head office for France. There will be more shared functions, which means the role of the headquarter will shift drastically.
Update: thus far, it is unclear to what extent the Belgian headquarters in Brussels will be affected. At the moment there are 150 employees working there, a spokeswoman informed Bruzz, a local Brussels magazine.
Saving one billion euros
In total, the French yoghurt maker wants to achieve a 20 per cent reduction in overhead costs and save one billion euros by 2023. This way, Danone should become profitable again in less than a year, and by 2022 Faber is counting on an operating margin of more than 15 per cent, returning to pre-corona levels. Danone already announced the reorganisation in October, due to a sharp drop in quarterly profits.
Faber, therefore, wants to prioritise profitability. "This transformation is necessary because we find ourselves in a paradoxical situation. On the one hand, our One Planet, One Health action framework is anchored in a portfolio of healthy and sustainable products and brands and is even more relevant in today's world. On the other hand, we are unable to reap the benefits of the current positive trends."