Danone revamps itself, ousting CEO and adding to its portfolio

As Danone continues to face pressure both from industry competition as well as activist investors, the company has decided to separate its chairman and CEO roles, which are currently held by Emmanuel Faber. Additionally, Danone is searching for a new CEO, but Faber will remain in his current positions until a replacement is found, at which point he will become a non-executive chairman.

Questions over Danone’s overarching strategy along with weak stock prices have brought the French food giant under fire, driving the company to look to reinvent itself by freshening up its leadership board. Along with replacing its CEO, the company’s board decided to appoint Gilles Schnepp as Vice-Chairman, a role he will hold concurrently with the company’s former CFO Cécile Cabanis.

This move comes as Danone has continued to fail to take a significant lead in the market despite an enviable portfolio of trendy products, including plant-based and sustainable alternatives. In fact, critics have pointed to the company’s unrelenting investment in the environment and its sustainability initiatives as a reason that the financial performance of the company has suffered. Three years ago, Danone North America was granted a B Corp certification, a designation given to companies that are "using business as a force for good through their commitment to social and environmental performance, accountability and transparency." More recently, the Wall Street Journal reported last year the company said it would place additional emphasis on environmental sustainability goals as the entire company looks to earn a B Corp certification. Nearly two dozen of its subsidiaries have already achieved that status.

Despite the criticism, the recent leadership change and the fact that the company’s struggling finances led to the November announcement that it would cut about 2% of its global workforce this year, Danone continues to remain dedicated to its sustainability ethos.

This month, Danone North America launched a new brand called Honest to Goodness where its first product line is a vegan creamer that is made with ingredients that are selected with the intention of supporting local communities. The origins of the ingredients used in these creamers are transparently recorded and made available to consumers. To further underscore the sustainability of the brand, Danone is partnering with EarthDay.org's The Canopy Project in Madagascar for the launch in order to support best practices and awareness in the agroforestry sector with the intention of using sustainable education to bolster local economic development.

While this undertaking is undoubtedly a financial commitment for Danone, its debut of a brand that gives back to the global environment directly responds to the growing number of consumers that are asking for brands to be more transparent about their products and supply chains. And consumers are willing to pay for brands that deliver. In 2019, Toluna conducted a study that showed consumers are willing to pay up to 5% more for environmentally friendly products. Perhaps Danone is banking on the fact that the larger price tag that these sustainable products can command will help turn around its fortunes and bring the French giant back on top.