Danone Strategy

The company that I chose for my final project is the Dannon Company. The Dannon Company was established in the United States in 1942 in New York City. Dannon is a subsidiary of global company Groupe Danone, whose headquarters are in Paris, France. Danone has operations in the United States, France, and Canada and is one of the largest health-focused food companies in the world today. Danone has four major business lines: fresh dairy products, water, early life nutrition and medical nutrition.

This initial setback with dairy products drove Danone to copy in China the alliance strategy used with great success to expand into Italy and Spain in the 1980s. Danone decided to capitalize successful local businesses rather than build its own businesses from scratch, resulting in a strong focus on joint ventures and acquisitions. Unlike most multinationals, Danone gave these acquired local businesses a great deal of autonomy. The joint ventures and acquired firms continued to sell their products under their own brands. Until late 2002, 80 per cent of Danone’s sales in China were under local brands. Furthermore, Danone let the former executives run the businesses and didn’t get involved much in daily operations. In fact, Danone functioned more like a capital investor, linking its joint ventures through capital investment rather than joint products. This expansion strategy in China worked very well. In 2001, Danone had become one of the largest food concerns in China, with $1.2 billion in sales, more than 50 plants and around 25,000 employees.14 Accounting for 9 per cent of Danone’s international sales in 2003, China became Danone’s third largest

The next project was bottling Gordon Biersch signature beer and retailing it. This had three biggest challenges: this project was entirely Gordon’s baby and demanded time and attention; secondly the freshness of the bottled beer versus the freshly brewed was an issue for which they decided the beer would have a shelf life no longer than three months. Thirdly and the most exciting challenge was the head-to-head competition with other microbreweries and premium beers. Despite the tough competitive environment, Gordon Biersch aimed to achieve 11% of the market in three years (by 1996). This retail venture required huge investment, thus they decided to start small to prove to the investors that they could pull it off.

* Stern School of Business, New York University, New York, NY 10012, (212) 9980864, fax (212) 995-4218, http://www.stern.nyu.edu/networks/, neconomi@stern.nyu.edu Copyright ©, N. Economides

The main decision problem for Boston Beer Company is whether or not it should remain in the light beer market. This is followed by four subsidiary decision problems if the answer to main problem is yes: should BBC create a new light beer brand, and if so what positioning should it take, should they keep Lightship, and if yes, should BBC maintain or change Lightship’s positioning. The research problems are as follows: it is profitable for BBC to remain in the light beer market, what are the growth trends, what role does light beer play in the retail scene, what types of people drink light beers, what are their values, is the positioning of Lightship in line with what light beer drinkers seek, and if not it is feasible to change its

Prior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following stockholders’ equity figures:

According to The History of Danone (2009), Isaac Carasso was inspired by the research of Elie Metchnikof, and in 1919 he began using ferments from the Pasteur Institute to manufacture yogurts to sell on prescription to pharmacies in Barcelona, Spain. Carasso began this work, because he saw an opportunity to help the number of children suffering from intestinal disorders, due the lack of healthy nutrition following the First World War. By 1929, Daniel Carasso, Isaac’s son, continued to grow the company by launching the company Danone in Paris. Business for Danone continued to prosper in Paris until 1941, when Daniel

Definition of Project: After taking over the reins from his father Edgar Bronfman Sr. in 1994, Edgar Jr. launched a campaign in 1995 after meeting with 200 of his senior management team to announce that Seagram would be the “best managed beverage company”. Therefore, he explained the challenges that profits gain by the development of their premier products, the diversification and acquisitions into new markets during the 1960’s into the late 1980’s would need a new fresh strategy for Seagram’s to keep their competitive standing, hence the introduction of “Seagram Values” (Jick & Peiperl, 2011). These values would direct the company towards effectively managing business processes, the reduction of cost and foresight towards growth opportunities.

Numerous changes were made in key personnel in order to make a strong push into consumer products outside of sodium bicarbonate-related products and into the international arena in the early 2000’s. (Church, p.3) Many of the new management hires came from well known corporations and brought with them extensive marketing and international experience.

Danone felt that the U.S. was an emerging market for yogurt and hence, Dannon focused its marketing strategy on increasing the yogurt consumption and expanding the category. Dannon had to follow Danone and maintain a strong commitment to CSR. At Danone, local decision making and was trusted and encouraged. Also, Dannon had a responsibility to its parent company and was accountable for a set of deliverables and data for reporting purposes. It believed in collaborative decision making and therefore major strategy

production standards, and cold filtered brewing approach. As the company expanded its distribution to new markets

areas were canned tomato products, frozen orange juice, cake mixes, and yogurt. Barkley was known to have strengths in operations (product preparation), distribution (obtaining distribution and managing the shelves), and advertising. Their brands typically held a solid second-place position in the supermarket. There was no effort at umbrella brand identification, so each product area was carried by its own brand. Joyce Stevenson had previously been in strategic planning, and reviewed the type of information and analysis that would be required to support a strategic decision like this one. She wrote down the following four sets of questions to guide the thinking of the research group: 1. Market analysis ■ What are the size, current growth rate, and projected growth rate of the industry and its relevant subsets (such as ethnic dinners) for the next five and ten years? ■ What are the important industry trends? ■ What are the emerging production technologies? ■ What are the distribution trends? ■ What are current and future success factors (a competitive skill or asset needed to compete successfully)? 2. Environmental analysis ■ What demographic, cultural, economic, or governmental trends or events could create strategic threats or opportunities? ■ What major environmental scenarios (plausible stories about the future) can be conceived? 3. Customer analysis ■ What are the major segments? ■ What are their motivations and unmet

Meanwhile, since Grolsch used other brewers for distribution while importing beer into foreign countries, the ongoing industry consolidation often led to a need for changing distributors. In several of their markets Grolsch was already on its third or fourth distributor in the span of 15 years. Besides the political, economic, and logistical issues Grolsch had to adapt to, they also were adapting to cultural differences. Their marketing campaigns would vary significantly from market-to-market. While their ability to be nimble, change strategies, and adapt where necessary has been a benefit, it has also been limiting in that Grolsch has struggled to build a consistent brand image and market position in several of its key markets. For example, even though the UK accounted for 25% of Grolsch’s volume, they still only held 1.5% of the UK market. Further, operations have been impacted by the consistent turnover of distributors in several important markets. Grolsch’s adaptation strategy has kept them nimble but has prevented any large scale and stability in certain countries outside the Netherlands.

However, Danone may need to consider extending its concept deeper, richer or wider to determine whether the benefits may be higher than they currently are (Edmondson, et al., 2008).

DANONE is one of the largest multinational companies in the food and beverage industry. By the end of 2016, counting from the consolidated companies to the sub-divisions in more than 130 countries, DANONE has 99,187 people as full-time employees (Danone, 2016). Base on the geographical area, majority of the employees, they work in European countries