Danone launches €1 billion efficiency programme
Danone has launched a €1 billion efficiency programme. CEO Emmanuel Faber notes, “While we delivered a robust performance in 2016, the challenges we faced, including a slower turnaround of dairy in Europe and major market volatility, are a clear case to step up in our ability to seize consumer opportunities and improve our efficiency.
“The announced changes will drive horizontal collaboration and vertical delegation across our entire organisation, making us more agile to grow, closer to consumers, and driving consistency in resource allocation. On one hand, I have decided to address our efficiency agenda in a radically new way, and to launch a comprehensive, company-wide programme allowing us to spend better, in a more sustainable way and to work more efficiently. On the other hand, fueled by resources generated from higher efficiency, our new integrated growth and innovation process will gradually bring our brands into an entirely new level of relevance with their communities of consumers, which is the core of the alimentation revolution.
“These decoupled mid-term growth and short term efficiency agendas, linked by our seamless resource allocation process, will allow us to reach both our short and mid-term financial objectives, beyond the benefits of the future WhiteWave acquisition.”
Danone’s fresh dairy products division reported sales up 2% like-for-like, after a 0.6% growth in 2015. This performance reflects mainly an acceleration in growth in the CIS and North America region the company says. In the US, Danone generated solid growth throughout the year despite a more competitive environment in the second half of 2016. Brand innovation and activation have contributed to reinforcing Danone’s leadership and more generally its fundamentals, in the face of a category expected to become more challenging in 2017.
In Russia, Danone demonstrated the resilience of its business model for the third consecutive year, in a difficult economic environment. The enhancement of its brand portfolio’s value through mix management and the strength of its brands has offset lower volumes and generated solid sales growth.
In Europe, sales trends have been impacted by Activia’s performance and aggravated market conditions in Spain in the fourth quarter. At this stage, Activia’s sales results are below expectations as the relaunch has not delivered the brand’s turnaround. Given the ambition of the transformation, this turnaround will take time, local execution plans are being reworked and teams have already started to implement them country by country.
The Asia-Pacific/Latin America/Middle East/Africa region generated strong growth in 2016. However, in an economic context experiencing high inflation and fragile consumer spending in Latin America, the fall in volumes observed in the first nine months of the year continued into the fourth quarter, particularly in Brazil, and is expected to last in 2017.