Danone is within the midst of a significant interval of upheaval in each its enterprise and government ranks, punctuated by the elimination of its CEO amid investor discontent with the corporate’s underperforming manufacturers and lackluster share worth. Véronique Penchienati-Bosetta, the top of Danone Worldwide, and Shane Grant, who’s the CEO of its North America operations, have run the enterprise whereas the corporate looked for its new chief. They are going to proceed to run the corporate till de Saint-Affrique takes the job.
“Danone has vital potential to proceed to form and contribute to how folks eat and drink globally,” de Saint-Affrique stated. The corporate, he famous, has a “sturdy and revolutionary portfolio of manufacturers.”
Regardless of a deep presence in yogurt, plant-based meals, water and child meals that populate massive swaths of the grocery retailer, activist traders together with Artisan Companions Asset Administration, Causeway Capital Administration and Bluebell Capital Companions have referred to as for modifications.
“The underperformance of Danone’s share worth has been pushed, in our view, by a mixture of poor operational observe report and questionable capital allocation decisions,” Bluebell wrote in a November letter to Danone’s lead impartial director, Michel Landel.
The selection of de Saint-Affrique as CEO provides Danone a seasoned meals government who has spent practically the previous six years operating chocolate components supplier Barry Callebaut.
Earlier than that, he was at Unilever for 15 years, together with 4 years as president of its meals division. De Saint-Affrique has helpful worldwide expertise that can turn out to be useful operating Danone’s expansive international footprint, which incorporates operations in Europe, Asia, Africa, the Center East and North America.
Barry Callebaut, one of many world’s prime producers of high-quality cocoa and chocolate merchandise, has been working to develop gross sales and set excessive requirements for innovation and environmental and social accountability.
At Danone, which positioned a serious deal with its environmental, social and governance objectives below Faber, such experience and perception from de Saint-Affrique might be immensely helpful. Nonetheless, he should take care of critics who’ve stated Danone has centered an excessive amount of on its environmental and sustainability efforts on the expense of its monetary efficiency.
De Saint-Affrique’s largest problem, nonetheless, may are available in rejuvenating gross sales and keeping off stiff competitors.
Danone is going through stress from Normal Mills’ Yoplait, Greek yogurt maker Chobani, in addition to numerous startups. The bottled water class is inundated with scores of big-name and private-label manufacturers. This contains Nestlé, which lately offered its North American bottled water enterprise to deal with its worldwide premium manufacturers, native pure mineral waters, wholesome hydration merchandise and purposeful water.
Danone has an enormous presence in plant-based choices, which it doubled down on with its $12.5 billion buy of WhiteWave in 2017. However Danone is going through sturdy competitors from different CPGs and smaller companies on this rising class.
The corporate is within the means of conducting a strategic evaluation of its portfolio of manufacturers, SKUs and belongings. It lately offered its stake in China Mengniu Dairy for $2 billion, and plans to make use of the cash to repurchase its shares.
It is also assessing the way forward for its plant-based protein powders model Vega and its belongings in Argentina. The sale of its China Mengniu stake, in addition to divestitures of different companies or manufacturers, may give de Saint-Affrique a extra centered portfolio and the money windfall he must spend money on Danone’s choices and take care of a surge in enter prices for the enterprise.