Danone is launching a new strategy: the yogurt manufacturer says it has underperformed in recent years, but new CEO Antoine de Saint-Affrique wants to turn the tide.
Lack of focus and action
“Today is an important milestone for Danone. We have a new CEO, a new strategy, and a clear objective: accelerate organic growth to restore sustainable value creation”, Chairman Gilles Schnepp stated when announcing the new ‘Renew Danone’ strategy.
When he took office in mid-September, Danone’s new CEO immediately had an evaluation made of the producer of Activia and Evian, and it was not particularly positive. The company has underperformed in the past and is not doing as well as its competitors. This is due to “a lack of focus”, “late and sub-scale innovation efforts, inconsistent execution and low investments”.
Starting from within
The CEO also blames a lack of focus on the core product range. Therefore, a new strategy must first get the group back on track with its current activities before considering further expansion. De Saint-Affrique is tightening the reins and is referring, among other things, to “stronger discipline”, better execution and speedier reactions.
The plan is built on four – deliberately vague – strategic pillars. The first is the recovery of the core categories and geographies, after which “selective expansion” should follow. The manufacturer also wants to invest more heavily and in a more targeted manner regarding innovation, expressed as the “seeding of future growth avenues”. There will also be more rotation in the brand portfolio, which means discontinuations and acquisitions are in the pipeline. At least 10 % of sales should go to changes in the brand portfolio.
Fully renewed board
In the short term, it means Danone is assuming comparable sales growth of between 3 and 5 % by 2024 and even higher profit growth. However, in 2022, the margin will suffer from higher input costs between 10 and 15 % due to inflation. Meanwhile, the reorganisation announced last year, which involves cutting 1,850 jobs, continues unabatedly.
Danone is also putting its board of directors in order. Since July last year, the board of directors has been renewed with new members, and by April 2023, the process will be fully completed. “We are embarking on a renewal journey with a worthy destination: bringing Danone back to where it belongs”, they say with great determination.