Danone is a French multinational food-products corporation based in Paris. The company is listed on Euronext Paris and on the OTCQX market via an ADR (American Depository Receipt) program.
Danone is present in over 130 markets and generated sales of EUR22.4 billion in 2015, with more than half in emerging countries. In 2015, fresh dairy products represented 50% of the group's total sales, early life nutrition 22%, water 21% and medical nutrition 7%.
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History
Name
The original company bearing the corporate name was founded in 1919 by Isaac Carasso, a Sephardic Jew from Carasso family of Salonica, Ottoman Empire, in Barcelona, Spain as a small factory producing yoghurt. The brand was named Danone after Danon, the nickname of his son Daniel Carasso.
Ten years later, the company moved from Spain to France, and its first French factory was built. During the German occupation, Daniel Carasso moved the company to New York to avoid persecution as a result of his Jewish faith. In the United States, Daniel Carasso partnered with the Swiss-born Spaniard Juan Metzger and changed the brand name to Dannon to sound more American.
In 1951, Daniel Carasso returned to Paris to manage the family's businesses in France and Spain, and the American business was sold to Beatrice Foods in 1959; it was repurchased by Danone in 1981. In Europe in 1967, Danone merged with Gervais, the leading fresh cheese producer in France, and became Gervais Danone.
Glassmaking tradition
Another branch of Danone descended from industrial glassmaker Boussois-Souchon-Neuvesel (BSN), which was founded by the family of Antoine Riboud. After a failed attempt to take over its larger rival Saint-Gobain, Riboud transformed it into one of Europe's largest food groups in the 1970s through a series of acquisitions and mergers, including the 1973 merger with Gervais Danone.
Strategic reorientation
The acquisitions initially took the shape of vertical integration, acquiring Alsatian brewer Kronenbourg and Evian mineral water who were the glassmaker's largest customers. This move provided content with which to fill the factory's bottles. In 1973, the company merged with Gervais Danone and began to expand internationally. In 1979, the company abandoned glassmaking by disposing of Verreries Boussois. In 1987, Gervais Danone acquired European biscuit manufacturer Général Biscuit, owners of the LU brand, and, in 1989, it bought out the European biscuit operations of Nabisco.
In 1994, BSN changed its name to Groupe Danone, adopting the name of the group's best-known international brand. Franck Riboud succeeded his father, Antoine, as the company's chairman and chief executive officer in 1996 when Riboud senior retired. Under Riboud junior, the company continued to pursue its focus on three product groups (dairy, beverages, and cereals) and divested itself of several activities which had become non-core.
In 1999 and 2003, the group sold 56% and 44%, respectively, of its glass-containers business. In 2000, the group also sold most of its European beer activities (the brand Kronenbourg and the brand 1664 were sold to Scottish & Newcastle for £1.7 billion; its Italian cheese and meat businesses (Egidio Galbani Spa) were sold in March 2002; as were its beer producing activities in China. The company's British (Jacob's) and Irish biscuit operations were sold to United Biscuits in September 2004. In August 2005, the Group sold its sauces business in the United Kingdom and in the United States (HP Foods), in January 2006, its sauces business in Asia (Amoy Food) was sold to Ajinomoto. Despite these divestitures, Danone continues to expand internationally in its three core business units, emphasising health and well-being products.
In July 2007, it was announced that Danone had reached agreement with Kraft Foods Inc (now Mondel?z International) to sell its biscuits division, including the LU and Prince brands, for around EUR5.3 billion. Also in July 2007, a EUR12.3 billion cash offer by Danone for the Dutch baby food and clinical nutrition company Numico was agreed to by both boards, creating the world's second largest manufacturer of baby food.
Danone acquired the Unimilk group's companies in Russia in 2010 and the Wockhardt group's nutrition activities in India in 2012. In mid-February 2013 Danone announced their intention to cut 900 jobs or about 3.3 percent of their 27,000 person European workforce.
Since 2013, Danone has accelerated its development on the African continent, notably with the acquisition of a controlling interest in Centrale Danone in Morocco and equity interests in Fan Milk in West Africa and Brookside in Kenya.
Corporate governance
On 2 September 2014 Danone's Board of Directors voted to separate the functions of Chairman and CEO:
- Chairman of the Board of Directors of Danone: Franck Riboud
- CEO: Emmanuel Faber
As of 28 April 2016 the 15 members of the Board of Directors and the Secretary of the Board of Directors included
- Franck Riboud - Chairman of the Board of Directors of Danone
- Emmanuel Faber - Vice-Chairman of the Board of Directors and CEO of Danone
- Bruno Bonnell - Chairman of I-VOLUTION
- Jacques-Antoine Granjon - Chairman and Chief Executive Officer of Vente-privée.com
- Jean Laurent - Lead Independent Director of Danone and Chairman of the Board of Directors of Foncière des Régions
- Benoît Potier - Chairman and Chief Executive Officer of L'Air Liquide SA
- Jean-Michel Severino - Head of I&P SARL (Investisseurs & Partenaires)
As of 1 July 2017 the members of the Executive Committee are as follows: Emmanuel Faber - Vice-Chairman of the Board of Directors and CEO of Danone, appointed to the Executive Committee in 2000
Head office
Danone has its head office in the 17 Boulevard Haussmann building in the 9th arrondissement of Paris. Previously the company's head office and its 500 employees were located in several buildings on Rue de Téhéran in the 8th arrondissement of Paris. In 2002 the head office moved to its current location.
Main brands
Danone's brand portfolio includes both international brands and local brands. In 2016, the main brands are:
Fresh dairy products
- Danone - Dannon (US)
- Activia
- Actimel
- Yocrunch
- Danette
- Taillefine - Light & Fit
- Danonino - Danoninho (Brazil)
- Velouté
- Gervais
- Danacol
- AC
- Danio
- Prostokvashino
- Oikos - Griego (Chile)
- Stonyfield
Early life nutrition
- Aptamil
- Blédina
- Laboratoire Gallia
- Milupa
- Malyutka
- Cow&Gate
- Bebelac
- Bebiko
- Bebilon
- Karicare
- Nutrilon
- SGM
- Dumex
Water
- Evian
- Volvic
- Badoit
- Aqua (Indonesia)
- Mizone (China, Indonesia)
- Font Vella (Spain)
- Villa del Sur (Argentina)
- Bonafont (Mexico, Brazil)
- ?ywiec Zdrój (Poland)
- Agua Salus (Uruguay)
- Hayat (Turkey)
- Damavand (Iran)
Medical nutrition
- Fortisip
- Neocate
- Nutricia
- Nutrison
- Nutilis
- Complan
- Souvenaid
Joint ventures
In some areas, Danone has adopted a strategy of growth through joint ventures, particularly in fast-growing emerging markets which represent over 50% of its sales.
Danone signed joint ventures with Al Safi in Saudi Arabia (2001), Yakult in India (2005) and Vietnam (2006), Alquería in Colombia (2007), and Mengniu in China (2013-2014).
Bangladesh
In November 2005, Franck Riboud met Muhammad Yunus, founder of the Grameen Bank and later winner of the 2006 Nobel Peace Prize. The two men discussed at length their ideas on the development of poor countries and found that their areas of expertise were complementary. As a result, in 2006, the Grameen Bank and Danone form a company called Grameen Danone Foods, a social business in Bangladesh.
Grameen Danone Foods Ltd. produces a yoghurt called Shokti Doi containing protein, vitamins, iron, calcium, zinc and other micronutrients aimed to fill nutritional deficits of children in Bangladesh. Shokti Doi is sold for 6 euro cents, a price that studies found to be affordable for the poorest families. Its pursuit of profitability is based solely on criteria such as improving public health, creating jobs, reducing poverty and protecting the environment. Profits earned by the company are re-invested in expanding and running the business.
India
In 1995, Danone and Britannia Biscuits set up a joint-venture in India. It was terminated in 2006, after an arbitration in the Bombay High Court. In 2012, Danone acquired Wockhardt's nutrition business, including brands Dexolac, Farex, Nusobee and Protinex, in India.
Under the 1995 joint venture agreement to acquire Britannia Industries, Danone agreed not to launch food brands within India without the consent of the Wadia family. The partners also agreed on a right of first refusal to the other partner in the event of the other wishing to exit.
Danone also manufactures Yakult in India under a 50:50 partnership.
Israel
In March 1996 Danone signed an agreement to purchase 20 percent of the Strauss Group, Israel's second largest food manufacturer. Since the 1970s, Strauss Dairies had a series of partnership and knowledge agreements with Danone.
China
Danone has invested in China since 1987. It is one of Danone's top 5 markets.
Bright Dairy
In 2001, Danone acquired a 5% stake in Bright Dairy and, in March 2005, doubled its shareholding, and again, to 20%, in April 2006, becoming the third largest shareholder after Shanghai Milk Group and S.I. Food.
The parties announced in October 2007 that Danone would divest its stake by selling it to the other two main shareholders at a small profit. Bright Dairy said Danone would pay 330m yuan (EUR31m) to terminate the existing distribution and production agreement with it.
Wahaha
The Hangzhou Wahaha Group, the largest beverage producer in China, and Danone entered into a dairy products joint venture in 1996, in which Danone held 51%. It was hailed by Forbes magazine as a "showcase" joint venture.
Yet in 2005, Danone noted that alongside the 39 structures of the joint venture, 60 factories and distribution companies produce and sell beverages illegally under the Wahaha brand. Danone made several attempts to take a stake in the Wahaha companies external to the joint venture, but was rebuffed by Wahaha's General Manager Zong Qinghou. Danone and Zong Qinghou had signed a deal in December 2006 allowing Danone to buy a majority stake in these non-JV operations. However, Zong had second thoughts about the deal and reneged, claiming the offer was underpriced and held out for a higher price from Danone.
The dispute took on the shape of a trademark dispute, and Danone filed for arbitration in Stockholm on 9 May 2007. On 4 June, Danone filed suit in Los Angeles Superior Court against Ever Maple Trading and Hangzhou Hongsheng Beverage Co Ltd, companies controlled by Zong, his wife, and daughter.
In 2009, an agreement was reached between the two parties. Danone left the Danone-Wahaha joint venture and sold its shares (51%) to its former Chinese partner.
Mengniu
On 20 May 2013, Danone announced a strategic investment (4.0%) in Mengniu, the top dairy products company in China, through an agreement with COFCO (the state-owned largest food company in China a majority shareholder in Mengniu). Later on, Danone raised its interest in Mengniu from 4.0% to 9.9%. In 2016, Danone is Mengniu's second shareholder.
In addition, in May 2013, a joint-venture was created between Danone and Mengniu to grow the fresh dairy product category.
On 31 October 2014, Danone, Mengniu and Yashili announced that they had signed an agreement allowing Danone to take part in a private placement by Yashili totalling EUR437 million, at a price of HK$3.70 per share. Upon completion of the suscription, Mengniu and Danone respectively held 51.0% and 25.0% equity interest in Yashili.
Russia
On 18 June 2010, Danone partnered with Unimilk, one of Russia's main milk producers. Danone and Unimilk merged their fresh dairy products activities in Russia, Ukraine, Kazakhstan and Belarus. The joint-venture gave birth to the number one dairy products company in this region. Russia became one of the five most important markets for Danone.
Africa
In June 2012, Danone raised its interest in Centrale Laitière (leader of the dairy products market in Morocco) to 67.0%. Centrale Laitière is Danone's first franchise ever: the companies have worked together since 1953.
In October 2013, Danone teamed up with Abraaj Group to acquire FanMilk International, the leading manufacturer and distributor of frozen dairy products and juices in Ghana, Togo, Nigeria, Burkina Faso, Benin and Ivory Coast.
On July 2014, Danone announced the acquisition of a 40% interest in Kenya's Brookside, East Africa's leading dairy products group.
On 25 October 1972, Antoine Riboud, then-CEO of Danone, pronounced the "Marseilles speech". In an environment characterized by social tension and environmental concerns, he shared his thoughts on reconciling business growth and social responsibility to an audience of industry leaders.
In this speech he became the first CEO who claimed that business and human developments are closely interrelated and form a single whole. These ideas were very disruptive at the time and laid the ground to Danone's dual project (economic and social).
It has inspired many of Danone's decisions since then. Antoine Riboud developed profit-sharing with employees and reduced work time in the 1970s and early 1980s. More recently, the dual project inspired Danone to creating several funds:
- danone.communities, created in 2007 to finance social business
- the Danone Ecosystem Fund, created in 2009 to provide support to Danone partners (farmers, subcontractors, vendors.)
- Livelihoods, created in 2011 in order to finance environment-related projects (such as peasant agriculture, deforestation, access to energy in emerging countries...) and in return provide investors with carbon credits with strong social intensity
Danone Institute
The Danone Institute is a non-profit organization established in 1991, to promote research, information and education about nutrition, diet and public health.
The first Danone Institute was founded in France in 1991 by Danone. The company decided to develop and spread knowledge about nutrition and diet, and was seeking to encourage research on these fields.
Danone therefore wanted to create an independent and transparent non-profit association to promote public health. The company set up its first Institute in 1991 in Paris (France). Danone brought together international eminent scientists, nutritional experts, educational professionals and Danone representatives.
Nowadays, the Danone Institute still gathers nutrition scientists together toward education goal for a healthier tomorrow. The president is an independent scientist.
The Danone Institute focuses on research. It supports researchers or research teams in the fields of nutrition, diet and health.
Among its purpose, the Danone Institute aims at increasing nutrition knowledge among medical professionals, educators and parents. The goal is to develop programs which address local population health and nutrition issues.
This organization is devoted to noncommercial activities, and is free to use funds provided by the group as it wishes.
Danone Institutes around the world
Little by little, Danone opened several Danone Institutes around the world and set up an international network of local institutes.
18 institutes currently exist around the world. They are located in Belgium, Canada, China, Czech Republic, France, Germany, Indonesia, Israel, Italy, Japan, Mexico, Poland, Russia, Spain, the United States, and Turkey.
They operate under the aegis of the Danone Institute International. The Danone Institute International is responsible for steering the network, and encouraging a continual exchange between the various countries.
Today, more than 200 renowned experts in diet and nutrition are involved in this international network.
Each institute is composed of a board of directors and a scientific council. Each board includes 8 members. The board members are responsible for setting the strategic direction and budget for the organization. The scientific council that is composed of from 6 to 10 members, takes future programmatic decisions.
The institutes develop educational programs in their countries to deal with local health and nutrition issues. Each institute therefore develops its own program in order to be relevant in their environment. For instance, the Czech Danone Institute provides a fund to support research, development and education in nutrition, and scholarships abroad.
Each local Danone Institute develops specific programs including:
- Support research programs : scholarships, grants, awards, prizes
- Publications of research findings relating to health and nutrition
- Organization of scientific conferences
- Publication of newsletters and books for professionals (e.g., health care professionals, educators, journalists)
- Organization of workshops, training and educational sessions for professionals
- Production of pedagogic material, booklets, television and radio programs, PC games for parents, children...
- Spread the knowledge to the public
Throughout the world, the Danone Institutes continue to be non-profit organizations.
The Danone Institutes gather internationally renowned scientists in diet and nutrition from independent organizations (e.g.: universities, research centers). They are independent from Danone and do not have any commercial objective. Publications remain scientific and not commercial.
From 1991 to 2006, more than 40 prizes and awards have been attributed for more than EUR600,000. Over 140 events have gathered more than 30,000 health care professionals. And 75 publications have been published. More than 70 programs towards the public have been organized.
To date, Danone Institutes have funded more than 900 research projects. This represents a global budget of EUR16 million. They have set up dozens of educational programs. 100 symposia have been launched.
Danone Institute International
The Danone Institute International was established in 2004 to gather together the 18 Danone Institutes. Its goal is to develop large-scale international programs. It also aims at encouraging the sharing of the knowledge between the local institutes. It facilitates cooperation, collaboration and exchange between scientists.
Danone Institute International is a non-profit organization originally established with funding from Danone. The association promotes the exchange of information related to the relationship between diet, nutrition and health.
The Danone Institute International comprises more than 220 scientific experts, and may be considered as a think tank. This international network gathers renowned scientists from various fields such as clinical nutrition, pediatric medicine, microbiology, gastroenterology, psychology...
The Danone Institute International produces publications, supports research via grants, programs and a prize. The DII also organizes international conferences and symposia.
The Danone International Prize For Nutrition is a cornerstone in the work of the Danone Institute International.
Danone International Prize for Nutrition
The Danone International Prize for Nutrition is an award established in 1997 by the Danone Institute International, presented every two years to honour individuals or teams that have advanced the science of human nutrition.
The prize aims at encouraging nutrition research and promoting the public's understanding of the importance of this field.
This award is one of the most respected awards within the field of nutritional research. Many leading scientists received this award, that recognizes their accomplishments.
The Danone International Prize for Nutrition is worth EUR120,000. The prize is awarded every two years by the Danone Institute International and organized with the support of the French organization Fondation pour la Recherche Médicale.
The Danone International Prize for Nutrition recognizes a single researcher or a research team as leading a major step in nutrition, developing novel concepts, including research fields with potential application for populations.
The jury consists of up to 9 members including one member of the Fondation pour la Recherche Médicale. 50% of the jury members come from the Danone Institute International or the Danone Institutes. The jury selects one winner by a secret vote. In case of a tie, the Chair's vote counts as two votes.
Danone Institute International selected in 2007 Friedman through a process involving more than 650 applicants worldwide. Candidates must be employed by a not-for-profit institution and actively involved in research. Laureates are chosen after an independent and international selection procedure.
Prize winners: Source: Danone International
- 2016 Philip Calder, for his outstanding work on nutrition and immunity.
- 2013 Gökhan S. Hotamisligil, Harvard School of Public Health, for his outstanding research in immunology and metabolic diseases.
- 2011 Jeffery I. Gordon, Center for Genome Sciences and Systems Biology, Washington University School of Medicine, St. Louis, for his outstanding contribution to scientific research on the human gut microbiome, diet and nutritional status.
- 2009 Johan Auwerx, Federal Polytechnic School of Lausanne, for his research in molecular nutrition.
- 2007 Jeffrey M. Friedman, Rockefeller University and Howard Hughes Medical Institute; for research on the role of genetics and leptin, a hormone he discovered, in body-weight regulation.
- 2005 David J. P. Barker, epidemiologist at the Developmental Origins of Health and Disease Division Research Centre of Southampton University, UK and at the Heart Research Centre, Oregon Health and Science University, US, for the Barker Early Origins Hypothesis, also known as the fetal origins hypothesis or the thrifty phenotype hypothesis
- 2003 Ricardo Bressani, for his life-time commitment to maximise the understanding of the nutritional potential and limitations of local basic foods
- 2001 Alfred Sommer and team from the School of Hygiene and Public Health at Johns Hopkins University, for his work on Vitamin A deficiency
- 1999 Leif Hallberg, for his work on iron metabolism
- 1997 Vernon R. Young, for his work on protein and amino acids metabolism
Global summit on the health effects of yoghurt
In 2012, the Danone Institute International in collaboration with the American Society for Nutrition (ASN) organized an international working group to examine the health effects of yoghurt. They communicated their scientific conclusion to health care professionals and the public. One year later, the ASN and the Danone Institute International joined forces to launch the first global summit on the health effects of yoghurt.
This event aims at evaluating the state of science as concerns yoghurt consumption and public health.
The first summit took place in 2013 in Boston. It featured international experts in medicine and nutrition. Since that time, summits have been held every year.
Yogurt in Nutrition Initiative for a balanced diet
In 2013, the Danone Institute International, the American Society for Nutrition (ASN) and the Nutrition Society (NS) launched the Yogurt in Nutrition Initiative for a balanced diet. This program aims at examining the health effects of yogurt, encouraging research around yogurt as part of a healthy diet and communicating scientific information toward health care professionals and the public.
Through this project, the Danone Institute International plans to organize worldwide conferences to share researchers' findings. From 2013, the Yogurt in Nutrition Initiative for a balanced diet co-organizes every year Global Summit on the Health Effects of Yogurt.
The Danone Institute International in collaboration with the American Society for Nutrition and the International Osteoporosis Foundation also organizes the Yogurt in Nutrition Award. This prize is offered by the Yogurt in Nutrition Initiative for a balanced diet. This award, valued at USD 30,000, supports projects focused on the role of yogurt in the prevention and management of diseases. It finances research programs for 2 years. It recognizes individuals or research teams from public organizations, universities or hospitals.
Controversies
2005-2006: the Pepsico acquisition case
Due to its narrow focus and relatively small size, Danone is potentially an attractive takeover target for its competitors, namely Nestlé and Kraft Foods. In mid-July 2005, the share price of Danone rose 20% within two weeks on rumours of a bid approach by PepsiCo, although this intention was denied. Upon realising that a takeover of a national treasure such as Danone by a foreign company was indeed possible in the capital markets, the "economically patriotic" French government stepped in by drafting a law to protect companies in "strategic industries" such as Danone from takeover. This has been dubbed the "Danone Law".
Speculation was renewed once again in mid-2006, when PepsiCo declared its intention to grow significantly in France through a sizeable non-hostile acquisition, and Kraft was also reported in Le Figaro, a French daily newspaper, as not having ruled out an acquisition on French soil. The stock market apparently marked down the possibility of a bid by PepsiCo following Danone's acquisition of Numico.
China
In October 2012, a Save the Children survey was conducted in the cities of Hohhot, Beijing, Jinan, Shanghai, Nanjing, and Shenzhen. Sixty mothers of infants 0-6 months were interviewed in each city. 40% of the mothers interviewed said they had received formula samples. Of these, 60% were provided by company representatives, and over one-third by healthcare workers. The mothers reported that samples were provided by (in order of frequency): Dumex (Danone, and since May 2016 Yashili), Enfamil (Mead Johnson), Wyeth, Abbott, Nestlé, Friso, Ausnutria and Bei-yin-mei. The overall 2013 Save the Children report which includes this 2012 survey states, "If new mothers are given free samples to feed to their babies it can start a vicious circle that undermines their own ability to breastfeed. An infant satiated with formula may demand less breast milk, so the mother produces less, and that can result in her losing confidence in her ability to breastfeed."
Indonesia subsidiary
In February 2013 The Guardian reported that up until 2011, Danone subsidiary Sari Husada had midwives sign contracts to receive financial payments for selling a certain number of boxes of baby formula. According to Danone, this no longer happens, and has been replaced by a scheme which runs training for midwives. However, the main difference appears to be a change from cash to merchandise such as televisions or laptops, and often including items which are needed in the midwives' practices, such as oxygen canisters, TENS machines, and nebulisers. The Guardian has seen a spreadsheet detailing the number of new mothers contacted, the amount of 0-6 months formula sold, and the proportion of their target this represents. Danone commented: "That may still be happening, that's something we need to address."
Turkey marketing campaign
In June 2013 the organisation was accused in Turkey of "misleading mothers with a marketing campaign that warned they might not be providing enough breast milk to their babies [and suggesting] mothers use its powdered baby milk to make up any shortfall." Danone responded that it "based its advice on WHO guidance" and claimed that both the WHO and UNICEF "endorsed the campaign." The WHO said Danone did not have permission to use its logo and asked Danone to remove its name from the company's marketing materials within 14 days while Ayman Abulaban, the UNICEF representative for Turkey, said: "The Unicef Turkey office has not endorsed this campaign." UNICEF also requested that their name be removed from marketing materials.
Fonterra New Zeland alert
Following a statement by the New Zealand government and Fonterra on 2 August 2013 warning that batches of ingredients supplied by Fonterra to four Danone plants in Asia-Pacific might be contaminated with Clostridium botulinium bacteria, Danone recalled selected infant formula products from sale in eight markets (New Zealand, Singapore, Malaysia, China, Hong Kong, Vietnam, Cambodia and Thailand) as a precautionary measure.
The alert was lifted on 28 August when New Zealand Ministry for Primary Industries concluded after several weeks of tests that there was no Clostridium botulinium in any of the batches concerned. None of the many tests conducted by Danone before and after this period showed any contanimation.
On 8 January 2014, Danone announced its decision to terminate its existing supply contract with Fonterra and make any further collaboration contingent on a commitment by its supplier to full transparency and compliance with the food safety procedures applied to all products supplied to Danone. Reports suggested Danone could be seeking as much as EUR300 million in damages from Fonterra.
2013 Unethical marketing
There have been reports and allegations in 2013 that Danone engaged in unethical marketing of infant formula in China, Indonesia, and Turkey.
Source of the article : Wikipedia
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