Danone’s CEO: Company’s performance in the U.S. fell short of expectations and efforts must be intensified

Danone’s CEO: Company’s performance in the U.S. fell short of expectations and efforts must be intensified

Danone’s Leadership Shift and Strategic Overhaul Amid U.S. Performance Challenges

Danone, the French multinational food and beverage company, is undergoing significant leadership and strategic changes following pressure from activist investors and underwhelming financial performance, particularly in the U.S. market. In March 2021, Emmanuel Faber stepped down as CEO and chairman, marking the end of a tenure criticized for stagnant shareholder returns. His successor, Antoine de Saint-Affrique, has since spearheaded a strategic review aimed at restoring growth and profitability according to reports.

The U.S. operations, home to brands like Horizon Organic and Wallaby, have been a focal point of concern. In 2023, Danone reportedly explored the sale of these underperforming assets as part of a broader effort to streamline its portfolio and redirect resources to higher-growth areas as reported. This follows years of competitive pressures in the dairy and plant-based sectors, with rivals such as Chobani and General Mills' Yoplait eroding market share. Activist investors, including Bluebell Capital Partners, have long criticized Danone's capital allocation and operational execution, citing total shareholder returns of just 21% under Faber's leadership—well below peers like Nestlé and Unilever according to data.

In response, de Saint-Affrique unveiled the "Renew Danone" strategy in 2022, emphasizing core category revitalization, disciplined capital allocation, and selective expansion. The plan targets 3–5% annual sales growth and improved operating margins, with 2022 positioned as a foundational year for restructuring as detailed. Key initiatives include cost-cutting measures, such as the 2,000 global job reductions announced in 2021, and a strategic review of brands and geographies. However, analysts remain cautious, noting that without transformative acquisitions or divestitures, the impact of these steps may be limited according to analysis.

Danone's U.S. challenges underscore broader industry dynamics, including intense competition in dairy and plant-based markets. While the company has strengthened its sustainability efforts—such as achieving B Corp certification for its North America operations—critics argue these initiatives have come at the expense of financial performance as noted. The potential sale of underperforming brands reflects a shift toward prioritizing profitability, though outcomes remain uncertain.

As Danone navigates this transition, stakeholders will closely monitor its ability to balance strategic overhauls with operational execution. The success of "Renew Danone" hinges on its capacity to address long-standing inefficiencies while adapting to evolving market demands.