Specialist
Former executive at Danone SA
Agenda
- Danone (PAR: BN) US EDP (Essential Dairy and Plant-based) business update – positioning, strategy and growth potential
- Portfolio and brand analysis, including potential M&A scenarios
- Competitive landscape review
- Potential group-level management, organisational and portfolio changes, in light of shareholder activism
Questions
1.
Can you outline the key trends in the US dairy market, focusing on the categories relevant to Danone’s business such as yoghurt and plant-based dairy alternatives? What key consumer behaviours, shelf space trends or category growth rates would you highlight?
2.
You mentioned pricing pressure and high competitive intensity in traditional dairy, especially in the yoghurt sub-category, and suggested that product mix was the route to growth. Would you say US penetration rates being much lower than Europe offer a volume-growth opportunity? Is that more difficult than it seems?
3.
How has coronavirus impacted traditional yoghurt and plant-based alternatives? Are any impacts long lasting? What is your near-term outlook for those categories?
4.
What do you think was the strategic rationale behind Danone’s transformational acquisition of WhiteWave, which effectively doubled the size of the business?
5.
You mentioned that WhiteWave’s plant-based R&D accelerated Danone’s legacy yoghurt portfolio, but to what extent is plant-based yoghurt cannibalising traditional yoghurt? Was that discussed during the integration process? Is plant-based yoghurt introducing new consumers and occasions?
6.
What growth strategy did you pursue across Danone’s traditional yoghurt, plant-based and organic milk businesses during your time at the company? How do you think the company can achieve growth today? How might the newly appointed CEO of the North America business impact the strategy?
7.
How could strongly communicating soy milk’s health benefits give credibility to Danone’s aim to turn the product around, appreciating its importance to the Silk brand? Have the allergy issues been a headwind?
8.
Could you outline Danone’s oat milk subsegment?
9.
Oatly initiated the oat milk category in the US, with Chobani a close second. Why didn’t Danone get on the coat-tails of that category?
10.
How important is branding in plant-based milks? How loyal are consumers? How do they perceive Silk vs Blue Diamond vs private label? Does private label play to a different consumer?
11.
Would Danone organise itself by brand or by category? Silk is in several different categories of milk, but it is now also in yoghurt, oat milk and oat yoghurt. Who drives the company’s innovation and decision-making?
12.
What are Danone’s opportunities with its organic brand, Horizon? Organic is clearly on-trend, but how does that balance with pricing risks and the supply shortages Danone mentioned? How can the company manage those issues vs private label, which is a key competitor?
13.
Do you think there are any synergies between organic products and plant-based milks?
14.
What growth do you anticipate for Danone’s legacy yoghurt portfolio in the US? Are some brands under pressure? How strong are propositions around immunity with Actimel and digestive benefits with Activia? Do they resonate with US consumers? Can those brands deliver growth or will the category remain flat?
15.
What is your 3-4-year growth outlook for the total Danone US business? What are your expectations for the WhiteWave brands, assuming the legacy brands have flat or low-single-digit growth?
16.
Pricing pressure is likely to remain in traditional yoghurt, but are there mix benefits? Is coffee creamer growing more quickly at a higher margin?
17.
Do you think anything in Danone’s US dairy and plant-based portfolio is non-core? Could the company potentially divest Horizon? Earthbound was divested fairly quickly and I think Vega has been identified.
18.
You mentioned a clear reason behind Danone’s WhiteWave acquisition was the company’s entry into the plant-based market, which included adding Alpro to its European portfolio. How do you think Danone perceives the opportunity with Alpro? Has it lived up to expectations in Europe or other markets? How do you envisage that trajectory in the long term?
19.
How do you think the group will appoint a new CEO? Do you think it will consider an external candidate? What attributes do you think the board should take into account?
20.
Former group CEO Emmanuel Faber shifted global category management to the local markets. Do you think that makes sense, or is that something that the incoming CEO would likely reverse?
