\"Danone SA, incorporated on February 2, 1899, is a French-based company engaged in food processing activities. The Company's UK unit operates in four business lines, including Fresh Dairy Products, Waters, Baby Nutrition and Medical Nutrition. In Europe the Company's main markets are France, Spain, Germany, Italy, Benelux, United Kingdom, Poland and Russia. The Company's product Actimel, if consumed daily, helps to strengthen the organism's natural defences. The Waters business line includes activities focused on natural or flavored mineral water and on fruit-flavored or tea drinks, with a positioning concerned with health benefits. The Company's baby nutrition business line's activities consist mainly of producing food for newborns and babies. It also offers a diverse range of products for children aged 6 to 36 months. The Medical Nutrition business line develops nutritional products to prevent malnutrition and to improve its consumer's daily life. The Company competes with Nestle, PepsiCo, Coca-cola, Abbott, Mead Johnson and Fresenius. It has a workforce of 9600 people in UK.
The company's decline in sales has affected its revenue growth. In 2010, the company's revenue declined 1.56% to Euro2.25 billion, compared to Euro2.28 billion in fiscal 2009. The decline in revenue was principally due to decline in revenue from the Fresh Dairy Products, which declined to Euro855 million in 2010, compared to Euro869 million in fiscal 2009. The revenue from the Water segment declined 10.30% in 2010. This declining performance by the company is mainly due to the economic slowdown all around Europe, especially affecting the regions of company\'s operations. Despite individual customers being the end product users, Danone sells its products mainly to large retailers and grocery chains. In the fiscal year 2010, Danone's ten largest customers in UK accounted for about 24% of the consolidated sales. This concentration of sales within small number of customers poses counterparty risk in case of default and also increases the customers bargaining power.
As of December 31, 2009, the Company acquired Danone Clover and a 26.85% interest in Micropharma. In December 2010, the Company and Unimilk announced the finalization of the merger of their Fresh Dairy Product businesses. The company is defendant in various legal proceedings which affects the company's brand image and its operational performance. Danone agreed to sell its 51% stake in the Danone -Wahaha joint ventures to Chinese partners. Britannia Industries filed a case against Danone alleging that Danone's unauthorized usage of the Tiger Brand. Such litigations and legal proceedings usually result in fines, penalties or damages. Any adverse decision on these matters could have a negative affect on the company's operating results, as well as its reputation in the market.\"
[...] Traditionally, Danone group was highly dependent on fresh dairy product segment. It has vertically differentiated its product portfolio with R&D spending across non-core segments such as baby and medical nutrition. In 2011, research & development expenditure increased to million (2010: million). In United Kingdom, the company has horizontally diversified flavor and variant portfolios of its flagship and non-core segments to improve customer segmentation on long-term basis (e.g Volvic Tropical Fruit flavor launched in 2013). Further, it has aggressively diversified its portfolio in United Kingdom with launch of Oykos Greek yoghurt in March 2012 along with venturing into breakfast cereal marketspace (Activia Breakfast Pots in July 2012). [...]
[...] Further, it is aggressively expanding distribution network in United States (high growth and potential target market). Thus, Danone Group have actively reduced market risk on long-term basis. Thus, overall Danone Group has horizontally and vertically integrated product and pricing bargaining power worldwide. The improved advertising and promotional expenditure is enhancing long-term unique positioning across core markets such as Europe and United Kingdom. SWOT Analysis Strengths: The company has strong geographically diversified distribution network along with expansion into new channels such as pharmacies and drug stores in Austria and Brazil for its medical nutrition marketspace. [...]
[...] Eurazeo group along with Sofina & Henex group are the leading shareholders controlling and of equity respectively (2012). Institutional investors from United Kingdom control 10% of equity in December 2011. It entered United Kingdom, with launch of core brand Actimel in 1999. Danone Group Financial Performance (2007-2011) Source: Corporate Press Releases Similar to the first yogurt produced by Issac Carasso in 1919, United Kingdom has been one of the leading and oldest markets for Danone Group. In 2013, the company has steadily enhanced its new product developments and marketing expenditure in United Kingdom. [...]
[...] The company controls dominant market positioning across worldwide yogurt segment in 2012. Global yogurt segment reached US$73 billion, with year-on-year growth of in 2011-2012 (Datamonitor, 2012). The segment is stipulated to reach US$88 billion, with CAGR of in next 3-4 years (2012-2015). France is the biggest yogurt marketspace worldwide with per capita consumption of 17.8 kilograms in 2012. On global basis, United Kingdom is the fourth leading with per capita consumption of 9.1 kilograms. The market is highly fragmented with five largest manufacturer controlling 41% of total (Datamonitor, 2012). [...]
[...] The market is slightly consolidated with four largest providers (Muller, Yoplait, Danone and Nestle) controlling approximately 57% of market share (2012). Finally, the company niche presence in United Kingdom cheese and fresh dairy products such as milk markets. Danone Group operates in slightly consolidated and price sensitive markets in United Kingdom. Although traditionally fresh dairy products have been the core driver for the enterprise it has slightly shifted focus towards baby food and cheese marketspaces on short to medium term basis. [...]
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