The results of the first half of 2008 reflected a 9.6% growth of the various 'Strategic Business Units' from the restructuring of Danone completed in 2007. Indeed, the Danone Group recorded a turnover of over 7.7 billion Euros for the same period. But what developments have Danone undertaken from its creation until today, what is its place in the market now? And what is the strategy of Franck Riboud (Chairman and Chief Executive Officer of Group Danone)?
Originally, Danone was called BSN (Boussois Souchon, Neuvesel); it was a Lyons-based company producing glass. BSN began to specialize in contents in the 70s to face the decline of the glass sales. It merged with the food group Gervais in 1973. After the undertaking of some mergers, the group withdrew from the glass business in 1979. Then it finally acquired a European biscuit manufacturer Lu in 1987 and engaged itself in the biscuit market to finally give birth to the Danone Group in 1994.
In 1998, Danone dropped several activities such as beer and packaging that did not fit in its strategy to focus on three main segments: dairy products, mineral water and biscuits and cereal products. Danone already had the ambition to position itself in the segment of well-being and health.
Danone has refocused on this segment of well-being and health sector by abandoning the biscuits and cereal products by selling Lu (representing 16% of sales in 2006) Kraft Foods in November 2007. This sale enabled him to purchase the Dutch group Numico by a takeover in July 2007. Numico is a jewel in Danone's ambition "to bring health through food to the greatest number."Indeed it is the entry for the Danone era of probiotics, prebiotics and biotechnology more broadly. In 2008, Danone is spread over 4 DAS that are fresh dairy products, mineral waters, medical nutrition and infant nutrition and allows it to be consistent with its strategy for health and wellness through diet.
Danone has begun to expand internationally to reduce its dependence vis-à-vis traditional markets (Europe mainly) where he directed more than half its sales. It focuses on growth markets of Asia and America.
The first method of development chosen by Danone is external growth. Danone chooses to build partnerships with companies that are leaders or challengers in their local market to better respond faster to local eating habits and have a production tool, a distribution channel and an existing logistics. This saves not only time (image and consumers already won) but also reduce production costs. If the partnership is satisfactory and promising, Danone increased its stake in the company before buying. Thus it has launched in the USA with Stonyfield.
Tags: Danone Group, analysis of Danone, Danone's strategic marketing position
[...] Indeed in 2007, Danone had a market share of followed by 29% of private label sales. Nestlé ranks only third with only of sales. MDD also have a prominent place in the water segment. Specifically, in 2007, Nestlé had a market share of respectively, followed by Danone, Neptune and MDD with more than 14% of sales. This stronghold of MDD in developed countries is due to the slower growth of the purchasing power of European households. Indeed, households had to arbitrate their spending favoring therefore MDD at the expense of national brands. [...]
[...] Danone refocusing on health and well-being is a strategy that seems to be a success, but it will take some years to perceive the real impact of this strategy on profitability. The Group's health picture is credible now, and this is essential for the coming years with alarming forecasts malnutrition and obesity, for example. Some even speak of an epidemic as the disease spreads rapidly (doubling by 2025). The focus on healthy food and even "health-oriented" seems to be a mandatory exit for the food market companies. [...]
[...] Danone would be in this sense, a visionary. Note: Please note that few diagrams cant beconverted to English. Bibliography Magazines and newspapers LSA Magazine Number 30 January 2008. "The ultra-fresh wakes up, but fears the price increases" (page 48) LSA Magazine Number 2 May 2008. "Re-open the tap Bottled Water" (page 48) Management Magazine Issue 153 Item Interview with Franck Riboud (page108) in May 2008. Les Echos. [...]
[...] The interest was in the fact that Numico operates in 16 countries, it is No in Eastern Europe, No in Western Europe, Asia, and the Middle East on the market child nutrition. This market increases by 6-13% per year depending on the country. Growth rate of Numico up to 20% in Turkey in 2007, for example. Numico is also the number one medical nutrition and generates 30% of its turnover in the group on this segment. The OPA also allows the group to focus (to health) for an external growth strategy. [...]
[...] This is double of organic products (representing and more than triple food supplements. Indeed, we are in a context where food manufacturers operate increasingly in products that lead to lower cholesterol, slow down osteoporosis, improve intestinal transit . and orient even in medical nutrition. In addition, innovations play a key role in this segment, and this gives the advantage to large groups such as Danone because financial resources it devotes to research and development. "Each claim must be scientific evidence of its effectiveness, and each study costs between 200,000 and 3 million" Sven Thormahlen, Research Director of Danone. [...]
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