Danone to cut 2,000 jobs to save $1.2B by 2023

15 Dec 2020

Danone will cut up to 2,000 jobs from its 100,000-person workforce, including up to 25% of the positions at its global headquarters in France. The company will undertake these reductions in a restructuring effort to save €1 billion ($1.2 billion) by 2023. The French dairy company will also look to reduce its levels of hierarchy to give more control to local managers that are more attuned to regional needs.

After being hit particularly hard by the pandemic – closed foodservice channels curtailed demand for bottled water, retail partners limited the number of Danone SKUs sold and a drop in birth numbers reduced demand for the company’s baby formula products – Danone is looking to revive its profitability. However, the dairy giant was cautious in its outlook for the next 12 months, saying that it does not expect to see the fruits of its labor until the second half of 2021.

Danone to cut 2,000 jobs to save $1.2B by 2023
Image Courtesy of Danone

“We definitely need to reinvent ourselves,” Emmanuel Faber, Danone's CEO, said in a statement. “Our recent results evidence this.”

Pointing to “brutal” external factors generated by the pandemic, the company is not only going to trim down its workforce to save money that it can then reinvest into improving its margins and supporting future growth, but it is also paring down the bureaucracy by putting control at a more local level.

Faber used the company’s Activia brand in a statement to exemplify how local control will translate to streamlining its business. Currently, the brand has four layers to manage it, but under the company’s new approach, it will only have two.

Other CPG conglomerates like Nestlé and Mondelez have instituted a similar approach, giving control to the heads of regional business segments, and they have seen a measure of success in this approach. Nevertheless, Bernstein analysts speaking to Reuters said that “Danone is doubling down on a strategy that hasn’t worked for the last five years.” Other analysts speaking to Bloomberg echoed this sentiment, urging caution for investors looking to this restructuring as a remedy for the French giant’s financial woes.

Recent months have brought significant change to Danone’s company structure. In October, the company named a new chief financial officer and divided its business into two regions, Danone North America and Danone International. Now it plans to assume a strategy focused on paring down its portfolio in tandem with its workforce. In the next year, the company hopes to drop smaller brands that account for 2% or less of sales, eventually reducing its product portfolio by 10-30%.

Even with these changes that are soon to come, the company also confirmed its 2020 guidance of 14% recurring operating margin and the delivery of €1.8bn free cash flow despite challenging market conditions.

Related tags

Market News

Related news

Kraft and Mondelez brands are moving toward gluten-free

Kraft and Mondelez brands are moving toward gluten-free

14 Dec 2020

Kraft Heinz and Mondelez are expanding further into the gluten-free space with the release of gluten-free Kraft Macaroni & Cheese and gluten-free Oreos respectively. Kraft Heinz’s mac and cheese is now available, but Mondelez will not launch its new Or...

Read more 
Abbott launches infant formula with immune component

Abbott launches infant formula with immune component

10 Dec 2020

Infant nutrition company Abbott Nutrition launched its new Similac line Pro-Advance which is its “closest formulation to breast milk” and includes added 2’-FL HMO prebiotic for infant immune support. The company is launching this product in Canada wher...

Read more 
Lactalis moves more brands into Indian market

Lactalis moves more brands into Indian market

8 Dec 2020

French brand Lactalis is expanding its hold in the Indian market through the launch of its UHT toned Lactel milk brand. These one-liter packs are fortified with vitamins A and D will retail for Rs70 ($0.94).

Read more 
Candy maker Mars to acquire Kind North America for $5B

Candy maker Mars to acquire Kind North America for $5B

7 Dec 2020

Candy maker Mars will fully acquire bar maker Kind Bar in a deal that is reported to be worth $5 billion. Daniel Lubetzky, the company’s founder told the New York Times, which first reported the deal, that Kind's sales are about $1.5 billion annually. ...

Read more 
Report: Food and Beverage spending anticipated to rise during holidays

Report: Food and Beverage spending anticipated to rise during holidays

4 Dec 2020

The Consumer Brands Association releases a report stating that spending in the food and beverage sector will be up 9.5-11.5% for the season. This forecast jump in spending is in line with CPG sales over three of the last four months which were reported...

Read more 
Avian Flu reaches Britain, quarantine measures set

Avian Flu reaches Britain, quarantine measures set

3 Dec 2020

In November, the first cases of avian flu were detected in the UK prompting the government to set up biosecure prevention zones across England, Scotland and Wales. Since then, the number of cases has continued to increase in both domestic and wild popu...

Read more 
Mondelez releases it second State of Snacking report

Mondelez releases it second State of Snacking report

30 Nov 2020

Snacking has now become a lifeline for people weathering the lingering pandemic. As compared to pre-COVID-19, 88% of adults say that their snacking has increased since this past spring, according to Mondelez’s second annual State of Snacking report.

Read more 
Former Walmart alumnus brings AI to trucking, minimizing spoiled produce

Former Walmart alumnus brings AI to trucking, minimizing spoiled produce

26 Nov 2020

The former Walmart executive Syed Aman has moved on in his logistics career and is now the cofounder and CEO of HWY Haul, a company that professes a goal of streamlining the business of delivering produce to retailers while also reducing food waste.

Read more 
Thanks to low production, turkey prices rise in November

Thanks to low production, turkey prices rise in November

23 Nov 2020

Thanksgiving and Christmas in the United States are shaping up to be expensive affairs even as consumers have suffered the economic ramifications of COVID-19 for most of 2020.

Read more 
Nestlé buys Freshly for $950M

Nestlé buys Freshly for $950M

20 Nov 2020

Nestlé acquired Freshly, a startup that provides home delivery of healthy meals, for $950 million at the end of October. The acquisition comes with the option for additional payouts of $550 million that is contingent on the successful growth of the bus...

Read more