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Danone (France)

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France's leading food group, Danone has restructured its portfolio several times in recent years to concentrate on what are now three key market sectors, each of which places it in direct competition with Swiss giant Nestle. It is already the world #1 in fresh dairy foods, with a strong collection of healthy and innovative yogurt-based products. This is now the group's single biggest business, accounting for well over half of total revenues. Building upon this platform, it has also established itself as one of the leaders in global infant foods and also medical nutrition, most recently with the acquisition of rival Royal Numico. It is the world #2 in bottled water, having lost its lead to Nestle as a result of serious challenges in key markets such as the US (where Danone trades as Dannon) and in China. Danone has steadily sold off all other businesses, including beer, cheese and sauces. In the most significant such disposal, Danone agreed a deal in 2007 to sell its biscuits and crackers brands, a sector in which it was the worldwide #2, to its main rival, then Kraft.

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Competitors

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Brands & Activities

Danone has pursued leading positions in its three core markets with single-minded intensity. Despite a comparatively narrow product range it has succeeded in establishing its company name as one of the best-known food and beverage brands worldwide, and its dairy products have captured the leading position in most major markets through innovation and a strong focus on healthy eating. However the group's other main units have performed less consistently, with sales and profits falling in recent years to below their levels at the end of the 1990s. In water, relentless competition in the US from Coca-Cola and PepsiCo, as well as traditional global rival Nestle, cost Danone much of its market profile, and the company's operations in China were irreparably damaged by a row with its local partner. In cookies, the steady growth of rival Kraft prompted Danone eventually to call it day and quit the sector altogether.

Unlike most of its competitors in the food industry, Danone is now tightly focused on three narrowly defined food and beverage sectors: Dairy and Plant-based Foods, in which is the world #1; Bottled Water, where it has slipped into second place by global volumes; and Specialised Nutrition, elevated from a sideline to a major interest through acquisition. All other businesses, including beer, cheese, sauces and most recently biscuits, have been divested. Its mission statement is "to bring health through food to as many people as possible".

Essential Dairy & Plant-Based

What was previously the Fresh Dairy division adopted a new name in 2017 following the integration of WhiteWave. Essential Dairy & Plant-Based (or EDP) products remain by far the group's biggest business, generating over half of total revenues. Danone is the leading manufacturer worldwide (ahead of Nestle and General Mills/Yoplait), with around 21% overall global market share, and a total 28% share across the markets in which it operates. Its ten biggest markets are France (market share of around 33%), Spain (46% share), Italy (25% share), Germany, the Benelux countries, the US (where it overtook General Mills in 2004 to become #1), Mexico and Argentina.

There are now three main sub-brands, including two marketed specifically on the basis of their health benefits. Activia is a probiotic yogurt containing live bifidus culture to assist with intestinal digestion, now sold in well over 70 countries. The product was known in some markets as Bio, but that name has gradually been dropped. In France and some other countries, "Bio" denotes an organic product, which Activia is not. The group has expanded its footprint with a range of variant concepts, including a range of Activia dairy desserts, snack pots, pouring yogurts and even MyActivia, a dispensing system for hotels and restaurants which provides a choice of fresh fruit and cereals as well as Activia. As a result, the brand has performed increasingly well in recent years. In 2010, it edged ahead of the less specifically health-oriented Muller Corner to become the top-selling yogurt in the UK for the first time. It has retained that lead, despite a slide in sales across the breakfast yogurt market. For 2012, Nielsen estimated local sales of £233m. In 2014, singer Shakira became the global brand ambassador for Activia, starring in an ad rolled out globally across more than 50 markets.

Another probiotic product, Actimel, is a drinkable yogurt which reinforces the immune system, and is now sold in more than 30 countries with sales which exceeded €1bn for the first time in 2006. (It is marketed in the US as DanActive). In response to its health-based marketing, Danone has had brushes with local regulators in both the US and Europe over the wording of its claims for for both Activia and Actimel.

The group's third global yogurt brand is Danonino, used as the umbrella for a portfolio of vitamin-enriched children's "fromage frais" products, sold in more than 50 countries under different names including Fruchtswerge in German-speaking markets, Petit Gervais brand in France, and as Danimals in the US. Between them, Activia, Actimel and Danonino generated more than half of the company's fresh dairy revenues.

Other products include Vitalinea, also known as Taillefine, Silhouette or Ser, a range of low-fat products aimed at adults, and various local yogurts including Obstgarten in Germany and VitaSnella in Italy. The company launched cholesterol-lowering Danacol yogurt in France in 2004 and has rolled out the product to other European and Latin markets. A new line of soy-based yogurts and other dairy products was launched in France and Spain in 2006 under the Senja brand. In 2009, the group agreed a joint venture with Chiquita Brands to take over management of that company's Just Fruit in a Bottle range of fruit smoothies in Europe and to develop other fruit-based beverages. It expanded the range to France in 2010 through the acquisition of local producer Immedia.

Dannon in the US offers a similarly extended range, and until recently the company also currently held an 85% stake in Stonyfield Farm, with its own range of natural and organic yogurt and ice cream products. In 2010, Dannon also agreed to acquire local frozen yogurt specialist YoCream for $103m, and it launched Oikos into the fast-growing Greek yogurt sector in 2011. SymphonyIRI named Oikos as the single most successful food & beverage launch of 2012 in the US, with first full-year sales of $284m. Combined US market share for Dannon and Stonyfield Farm yogurts in 2016 was around 36%, ahead of General Mills' Yoplait on 20% and Chobani at 18%. In the Greek yogurt segment, Oikos is #2 with 32% share (to Chobani's 37%).

In 2016, Danone announced plans to broaden its presence in US chilled dairy with a deal to acquire local producer WhiteWave Foods for around $10bn, or $12.5bn including the target company's debt. That deal, which completed in early 2017, marks Danone's first major acquisition for more than a decade, and would add WhiteWave's Horizon Organic milk, Silk and So Delicious almond and soy milks to its existing, mostly yogurt-based portfolio. WhiteWave also has US rights to the Alpro milk-alternative brand. The company reported revenues of $3.9bn in 2015. To appease regulatory concerns over the WhiteWave acquisition, Danone agreed to put its Stonyfield business up for sale in 2017. A deal was agreed with Lactalis Group for $875m.

There are numerous other local dairy products around the world, either spun off from the Danone umbrella (such as Danoninho or Danonino in Latin America) or separately branded. The UK was for many years a difficult market for Danone, but it now ranks in 2nd place (behind Muller) as a result of the launch of Actimel and Activia, and the acquisition in 2002 of Shape from Uniq. In 2009, according to figures from Nielsen Scantrack, UK sales of Activia rose by an impressive 25% to £220m, close behind Muller Corner, helped along by an aggressive marketing campaign featuring actress and singer Martine McCutcheon. Sales have fallen back since then, settling at £168m in 2015 (Nielsen, The Grocer). Actimel contributed a further £93m. Stonyfield established a presence in Europe in 2007 through the acquisition of Irish dairy producer Glenisk, and launched in the UK that year under the name Stony. However, it still has only a very low profile.

The group also owns a stake in Japanese fermented milk Yakult (the #4 yogurt producer worldwide). Having acquired a 5% holding in 2000, the group increased its stake (without Yakult's consent) to just under 20% in 2003 in a transaction on the open market. This initially put Yakult on the defensive, fearing a hostile takeover. However the two companies eventually signed a strategic alliance in 2004, agreeing to work together to develop their respective probiotic products outside Japan. Following the WhiteWave deal, Danone reduced its holding back to 7%. Within Japan, Calpis Ajinomoto Danone was for many years a joint venture with Ajinomoto, marketing a range of yoghurt products in Japan under the Danone brand as well as Evian mineral water. In 2007, Danone took full control of that business, now renamed Danone Japan.

In China, the group has a minority holding in local producer Shanghai Bright Dairy. In 2006, it established a joint venture with the leading local producer, state-controlled Mengniu Dairy Company, but this was abandoned after just a year as a result of poor performance. In the wake of steep increases in consumer demand for yogurt since then, the two companies made another attempt in 2013, launching a new joint venture to market chilled yogurt products in the country. Mengniu had around 17% of the Chinese yogurt market in 2012, according to Euromonitor, compared to 1.6% for Danone. The latter has an initial 20% stake in the new JV, to Mengniu's 80%. Danone also acquired shares in a separate joint venture with Mengniu's parent, food giant COFCO, to own shares in the main Mengniu business. A further acquisition in 2014 raised Danone's holding in Mengniu to just under 10%. Arla also has a 5% holding.

The group acquired a minority stake in Australia's leading dairy producer National Foods in 2003, but sold the shares a year later. Instead it now markets fresh dairy products Down Under in a joint venture with local producer Devondale Murray Goulborn. In 2009, Danone announced plans to take full control of a yoghurt-making joint venture with South Africa's leading dairy group Clover. Danone originally acquired a minority stake in that business in 1998, and has steadily increased its shareholding since then. The company has around 44% of the South African dairy market with local brands including Nutriday, Ultramel and Inkomazi, as well as Danone brands such as Vitalinea, Danao and Actimel. It has made several other purchases elsewhere in Africa to build its presence on that continent, including acquisitions in Morocco and West Africa.

In 2010, the group agreed a joint venture in Russia and other CIS states with its main local competitor Unimilk. The two companies agreed to merge their respective fresh dairy interests to form Danone-Unimilk, now the clear market leader with around 21% share, and annual sales of around €1.5bn. Danone has a 57% stake in the merged business. Key brands in the CIS region include the #1 Russian dairy brand Prostokvashino, as well as Terna and Smeshariki. The group also now controls Morocco's dominant dairy producer Centrale Laitiere, in which Danone has accumulated a shareholding of 91% by the end of 2014. Latest addition to the portfolio is East African dairy producer Brookside, in which Danone acquired a 40% holding in 2014.

Combined group revenues from what is now Essential Dairy & Plant-Based products were €12.95bn in 2017, including a contribution of around €2bn from WhiteWave.

Specialised Nutrition

Until recently, the dairy division also housed France's leading baby food manufacturer, Bledina, which now controls more than half its local market. This was split out into a separate unit in July 2007 after Danone sealed a deal to acquire Royal Numico, the Dutch-based maker of baby food and clinical nutrition products, for €12.3bn. Completed towards the end of the year, that transaction added a collection of important new brands to the portfolio including Cow & Gate and Aptamil baby foods in the UK; Bebiko and Milupa in the rest of Europe; and SGM in Asia. To appease regulators, some Numico brands were divested, including that company's baby milk products in France, and the Bledina and 123 brands in Belgium and the Netherlands. Danone is now the global #2 in baby nutrition after Nestle, but #1 in Europe and the Asia Pacific region. Cow & Gate and Aptamil dominate the UK babymilk category and but slipped to second place in the babyfood sector in 2015 (behind Hain Celestial's Ella's Kitchen; Kraft Heinz is in 3rd place). In 2013, Danone acquired US premium organic baby food manufacturer Happy Family, and the following year the group acquired a 25% holding in Chinese infant milk producer Yashili, controlled by its local dairy partner Mengniu.

Sales in several Asian markets including China were severely affected in the second half of 2013 after New Zealand dairy group Fonterra, which supplied Danone with ingredients for its infant nutrition products in the region, issued a warning of serious potential bacterial infection. That turned out to be a false alarm, but not before Danone had withdrawn stocks of lead brand Dumex across China. Negotiations between Danone and Fonterra for compensation for lost sales and profits stalled, prompting the French group to take its supplier to court. As a result, revenues from what is now grouped as Early Life Nutrition slumped in the final quarter, undercutting stronger growth earlier in the year. In 2015, facing continuing problems for its Dumex business in China, it agreed to transfer that business to Mengniu for an enlarged 12% holding in the larger company.

The group's medical nutrition products include Nutricia, Fortimel and Neocate, and it is researching several more specifically therapeutic products including multi-nutrient drinks designed for sufferers from diseases such as Alzheimer's and AIDS. In 2010, the group bolstered the US arm of the business with the acquisition of Medical Nutrition USA, a specialist provider of nutritional products for the elderly. Combined revenues for 2017 were €7.10bn, of which around €6bn came from infant & baby products.

Bottled Water

For several years, Danone and Nestle wrestled for the position of #1 in bottled water. In 2006, Danone shipped around 19.5bn litres, allowing it to claim to be the joint-leader, but #1 by geographic spread and the overall #1 in still water. Since then though, Nestle has gained a clear lead. Danone's production volumes for 2013 were 23.5bn litres. Danone's best-known water brand is Evian, the world's leading bottled mineral water brand, distributed in 120 countries. Global volumes were over 1.3bn litres in 2011. It is supported by two other international brands, Volvic and Badoit. In Western Europe, Danone is the market leader in the UK. Its top-selling brand there is actually Volvic, with sales estimated by Nielsen at £179m in 2016 (ye Dec 2016, The Grocer). Flavoured water variants accounted for two-thirds of Volvic's sales. Not far behind was Evian with sales of £158m. Danone is also market leader in Poland, but #2 in most other territories in the region. One of its weaker markets until recently was Italy, where it held the #3 position. In 2004, Danone sold its business there, including brands Ferrarelle and Italaquae, to investment group LGR Holding.

The US has been the main battleground for bottled water in recent years. Danone and Nestle's Perrier competed fiercely during the late 1990s to take the high ground. However both European companies soon found themselves on the receiving end of an unprecedented push by local giants Coca-Cola and PepsiCo. Despite substantial growth in the US bottled water market between 2000 and 2002, Danone's imported Evian and local Sparkletts and Alhambra showed the weakest performance. As a result, in 2002, Danone transferred marketing and distribution responsibility for its water brands in the US to a joint venture managed by Coca-Cola. In 2005, as a result of further disappointing performance by the joint venture, Danone transferred full control of Evian and its other bottled water brands in the US to Coca-Cola. That arrangement was terminated in 2009 and Danone took back full control of the Evian brand in the US in summer 2009. However its sales are very small compared to the fresh dairy business. Water contributed only around 5% of Danone's group revenues from North America in 2008.

Another battleground has been the home and office delivery (HOD) sector. Danone pushed heavily into this sector in the 1990s, striking joint ventures with Swiss-based Eden Springs to supply markets in Europe (as Danone Springs of Eden), and with Suntory to supply North America (as DS Waters Enterprises). However both business struggled to make headway against the furious competition from Nestle, Coca-Cola and PepsiCo. At the end of 2005, Danone decided to cut its losses and run in North America, acquiring Suntory's shares and then selling the whole business to investment group Kelso. In 2007 it sold its shares in the European joint venture back to Eden Springs. It continues to manage a small HOD service of its own, but mainly in Asia and Latin America.

However the bedrock for the group's water business is its substantial presence in Asia region. Indonesia's Aqua is the world's single biggest packaged water brand, sold mostly in large containers, with around 50% share of the huge domestic market, and sales of more than 9bn litres a year. Danone has a 74% shareholding in that business, alongside local partners. For many years, the group was also co-owner of Wahaha, the leading bottled water brand in China with more than 50% local share. This was produced until 2009 through a joint venture with Hanzou Wahaha Group. However, growing friction between the partners came to a head in 2007 when Zong Qinghou, Hanzou Wahaha's founder and CEO, gave interviews explicitly criticising what he described as Danone's unfair exploitation of the business. Danone subsequently accused him of setting up a new rival company to manufacture and distribute bottled water also under the Wahaha brand. Zong later resigned from the business amid an exchange of lawsuits on both sides. The two sides eventually called a truce in an attempt to resolve their differences and in 2009 Danone agreed to withdraw from the joint venture, selling back its 51% shareholding in the business. It continues to market the Robust and Health bottled waters in China under its own name. In Japan, Volvic and Evian are marketed through a joint venture with Kirin and Mitsubishi Group. That business is now the leader by value in the country, with a dominant position in the premium segment. The group is also the market leader in packaged water in Latin America, with Mexico, Argentina, Brazil and Uruguay as its most important markets.

Other regional bottled water brands include Salvetat and Arvie in France; Naya, Crystal Springs and Labrador in Canada; Font Vella, Lanjaron and Fonter in Spain; Zywiec Zdroj in Poland; Aqua d'Or in Denmark; Hayat in Turkey; Damavand in Iran; Bonafont in Mexico; Salus in Uruguay; Villa del Sur Villavicencio in Argentina; and Salus in Uruguay. In 2013 the group acquired majority control of Turkey's Sirma.

The group is also active in the "aquadrinks" flavoured water sector, with a range of fruit-flavoured or calcium-enriched products in several markets. These are marketed in several European countries under the Taillefine or Ser brand. The acquisition in 2002 of New Zealand's Frucor group added a selection of soft drinks to the portfolio, including energy drink V, juice brands Fresh Up and Just Juice. These businesses were sold to Suntory in early 2009 for around €600m, but Danone kept hold of bottled "energy waters" Mizone (launched with great success in China) and H2Go. In 2006, Danone acquired a 22% stake in China's market-leading fruit juice company Hui Yuan. It made an arrangement to sell those shares to Coca-Cola in 2008 as part of a plan by the US company to take full control of the business. That takeover was eventually abandoned, and instead Danone sold its stake in 2010 for around €200m. An 18% shareholding in Russian juice and dairy group Wimm-Bill-Dann was also sold back in 2010. That business was subsequently acquired by PepsiCo.

As a result of the problems in China with Wahaha, Danone stopped consolidating the revenues from that business pending resolution of the row. As a result of this as well as a global shift away from bottled water during the recession, reported revenues from the water division declined sharply from 2006, falling to a low of €2.6bn in 2009, before recovering over the following few years. For 2017, revenues were €4.62bn.

This is now Danone's smallest reporting division. There has been repeated speculation that Danone will divest its water business at some point, with Coca-Cola, PepsiCo and Suntory all linked at different times to rumoured negotiations.

Discontinued Activities

Until 2007, Danone was the global #2 in biscuits, and the #1 outside the US. Its main international brand was Lu. In July 2007, the group said it had reached a tentative agreement to sell its European biscuits division to Kraft's Nabisco for around €5.3bn. Because of France's sensitive political feelings regarding the disposal of national assets, that deal was put before Danone's employees and shareholders for approval. This was secured in October 2007, and the deal was completed the following month. Initially, Danone kept hold of the Bagley and Britannia biscuit businesses in Latin America and India respectively. However, the Britannia business was sold to joint venture partner Wadia Group in 2009. In Latin America, Danone's biscuits are distributed through a joint venture with local food giant Arcor.

Financials

Group revenues for 2010 rose 14% on a reported basis (7% like-for-like) to €17.0bn, helped by along by exchange rate fluctuation and one month's consolidation of the Unimilk joint venture. Net attributable income rose by an impressive 37% to €1.9bn, although that included some exceptional items. Underlying net income improved by 21% to €1.7bn. There was further growth in 2011, with revenues up by a further 14% in 2011 (8% like-for-like) to €19.3bn. Reported net income slipped slightly to under €1.7bn, although underlying net income excluding adjustments was up marginally to €1.75bn. For 2012, Danone reported revenues up 8% to €20.87bn, the first time that sales had topped €20bn. Growth came entirely from emerging markets and North America. However, reported net income was more or less unchanged at €1.67bn, although the group claimed a 1% increase in underlying profit.

In 2013, the group launched a major restructuring exercise, combining country units in smaller European markets to boost profitability. Revenues for that year rose 2% on a reported basis and almost 5% organic to €21.30bn, but attributable net income slipped 15% to €1.42bn as a result of European restructuring and expenses associated with the infant nutrition recall and subsequent legal dispute with Fonterra. Revenues for 2014 slipped to €21.14bn as a result of currency fluctuation. (The group claimed a near 5% increase at constant rates). Attributable net income fell 21% to €1.12bn.

Revenues for 2015 gained 6% on a reported basis (or 4% like-for-like) to a record high of €22.41bn. The US is the biggest single market at 11% of revenues in 2015, followed by France (10%), China and Russia (7% each), the UK, Indonesia and Argentina (6% each). Attributable net income rose 15% to €1.28bn. In 2016, revenues slipped back by 2% as a result of currencies to €21.94bn. However attributable net income soared by more than a third to €1.72bn.

Revenues rose by almost 13% in 2017, mainly as a result of the addition of WhiteWave, reaching a new high of €24.68bn. On a like-for-like basis, excluding WhiteWave, revenues were up 2.5%. Net income jumped by almost 43% to €2.45bn

In the UK, fresh dairy division Danone Ltd reported turnover of £201m in 2015, down 10% following a "challenging" year. It reported a decline in local volume market share to 15%, compared to 20% for own-label fresh dairy and just under 24% for main rival Muller. Net profit fell by almost two-thirds to £7m as a result of a £15m impairment against the Shape brand. Danone Waters UK Ltd reported turnover of £190m, up 4%, while net profit more than doubled to £8m. The group claimed a leading local volume market share of almost 33%, ahead of private label (23%), Nestle (18%) and Highland Spring (10%).

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Background

In 1966, the company that is now Group Danone was a manufacturer of glass. That year two separate French companies, Glaces de Boussois and Souchon-Neuvesel, merged to exploit changing social attitudes in France. Gradually, as glass became less expensive, French consumers had begun to drop the age-old habit of taking used bottles back to the shop to collect a deposit. As a result, bottle manufacturers were experiencing unprecedented demand, with production tripling during the decade. At the time Boussois specialised in plate glass for cars and buildings, while Souchon-Neuvesel made bottles. But both were keen to exploit the rapidly growing demand for containers, and merged to form Boussois Souchon-Neuvesel or BSN, one of France's biggest glass manufacturers.

However, group chairman Antoine Riboud, a descendant of Souchon-Neuvasel's founder Jean-Baptiste Neuvesel, was aware that glass bottles were in danger of being replaced by even more disposable plastic containers. Not content simply to manufacture bottles, he set out to strengthen the company's position by supplying the contents as well. In 1970, BSN bought up three drinks businesses that were already group clients, mineral water bottler Evian, and beer companies European Breweries and Kronenbourg. From there it was a comparatively logical step forward to move from beverages into foods which were packaged in glass bottles. In 1973, BSN mounted a reverse takeover of the Gervais Danone dairy company, becoming France's biggest food and beverage company.

Gervais Danone was itself the product of a merger six years earlier. Gervais had launched its Petit Suisse soft cheese during the 19th century, while Danone was a subsidiary of a company originally established in Spain in 1919, whose founder Isaac Carasso set out to manufacture yogurt as a health food. Inspired by biological research which suggested that yogurt could assist in the cure of intestinal disorders in children, his fermented milk products were initially distributed through pharmacies on doctors' prescription. He named the business after his own son Daniel, nicknamed "Danon". Having learned his trade in Spain under his father's tutelage, Daniel Carasso studied in the Pasteur Institute in Paris in the early 1920s, and set up a separate Danone business in France in 1929, marketing his yogurt to consumers as a dessert for trouble-free digestion.

Following the German invasion of France in 1941, Carasso fled to the United States, leaving the two separate businesses in France and Spain in the hands of managers. Instead he started up a third company, Dannon Milk Products, introducing Americans to yogurt for the first time. (The brand name was changed on the advice of legendary graphic designer Raymond Loewy who told Carasso that Americans would pronounce 'Danone' as 'Day-known', whereas 'Dannon' sounded more like the correct pronunciation). Later, Carasso returned to Europe in order to reclaim the French and Spanish businesses, and sold Dannon to Beatrice Foods in 1959. However a subsequent offer from Gervais to buy Danone France was too good to resist, so Carasso sold the French business in 1967 while keeping control of Danone in Spain. Carasso maintained close links with the business for the rest of his life and died in 2009 at the grand old age of 103.

As a result of this series of acquisitions, BSN transformed itself in the space of just ten years from a FF1bn glassmaker to a FF17bn food and beverage giant. But while food and drink boomed, the expanded BSN Gervais Danone's original business was contracting. The 1973 acquisition of Belgian glassmaker Glaverbel had given BSN dominance of the European market. Nevertheless, in 1981, the company pulled out of plate glass altogether, selling off Boussois. Instead it spent widely to expand its European food business, developing existing lines and adding new ones. First stop was the United States, where Dannon was flourishing. Danone bought its erstwhile spin-off from Beatrice Foods in 1981 for $82m. In 1986, the company acquired Generale Biscuit (owners of Lu), followed by the European operations of US company Nabisco. The latter move considerably expanded the company's portfolio, adding such brands as Belin in France, Jacob's in the UK and Saiwa in Italy. Other purchases included Pommery and Lanson champagnes, Italy's leading cheese maker Galbani, Ponte and Agnesi pasta (all subsequently sold). Danone also disposed of a few existing lines that didn't fit, such as Walker's Crisps, sold on to PepsiCo in 1989.

By the close of the 1980s, Danone had become Europe's third biggest food business. Further acquisitions followed in the 1990s: biscuit maker Cokoladovny in the Czech Republic, Bolshevik in Russia, Papadopoulos in Greece, W&R Jacob in Ireland, Volvic mineral water (from Perrier-Vittel in 1992) and a majority shareholding in the previously independent Danone Spain. (Danone SA built its holding to 66% in 2012, but the remaining shares are still owned by private investors, friends and family of Daniel Carasso). North America was an important target - in 1993, Danone acquired Canada's leading dairy business Delisle, followed by Aquaterra mineral water a year later.

The company dropped its full name in 1994, becoming simply Danone Group. Performance began to suffer mid-decade as the group became too big to manage all its very disparate product lines. Franck Riboud, a former windsurfing champion with a disarmingly relaxed style, took over from his father in 1996, and began a major restructuring of the increasingly diversified company. He announced that the group would now focus on the three main lines which constituted the core of its business, under the Danone, Lu and Evian master brands. A huge number of its other subsidiaries were sold off during 1997 and 1998 including Spanish grocery business Starlux (to Bestfoods) and Sonnen Basserman (to Heinz). In early 1999, Pycasa frozen foods in Spain were sold to Nestle, and Danone's half-share in Italian ready-made food company Star was acquired by its partners, Fossati. Also in 1999, the group sold off its remaining glass containers business to a management buyout.

With a stated aim to derive a third of its sales outside Western Europe by 2000, the group began busily forging partnerships and acquiring new businesses in its main brand lines. These include the takeover of Brazilian cookie manufacturers Campineira and Polish biscuit-maker Delicja; a partnership with Sabanci, the leading Turkish manufacturer of mineral waters and dairy products; an agreement with Clover, which heads the dairy products market in South Africa; an agreement with Moroccan dairy manufacturer Meddeb; acquisition of a 40% stake in Indonesia's #1 mineral water company Aqua for $32m (later increased to 75%); and 60% of China's mineral water producers, Health Leader ($18m). In 1998, the company spent $112m to acquire US mineral water business AquaPenn.

At the close of 1999 Danone entered the increasingly heated bidding wars for British cookie company United Biscuits, with a view to preventing US biscuit company Nabisco from re-establishing a strong presence in Europe. Nabisco had already opened the bidding with a £1.2bn offer through newly formed Burlington Foods, a partnership with venture capitalists Hicks Muse, Tate & Furst. Initially the UB board accepted Nabisco's offer. But within a day, the US bid was countered by a higher offer from Finalrealm, a consortium of European baking groups. Danone supported that bid by agreeing to acquire UB's operations outside France, if successful. A bidding war followed, with Burlington buying up almost 34% of UB's shares in the market and offering a higher bid for the balance. This was again countered by Finalrealm, as Danone's interest in the fight increased. In early 2000, the rival bidders called it quits and agreed to split their target between them with a combined £1.26bn bid. Nabisco became the largest shareholder in United with almost 25%, while Danone took UB's assets in continental Europe, and TUC biscuits in the UK, for around £290m.

Meanwhile, on another battle front, Danone increased the stakes in its struggle with Perrier for the US water market, paying $1.1bn for McKesson Water Products, America's third biggest processor and distributor of bottled water, with brands including Sparkletts, Alhambra and Crystal. In March the group pulled out of the beer industry, selling off its entire brewing portfolio to the UK's Scottish & Newcastle for £1.7bn.

Early in 2001, Danone agreed to license the Evian brand to Johnson & Johnson, for the creation of a new range of nine skincare products to be marketed under the Evian Affinity brand. Later that year, the group acquired New Zealand's leading soft drink manufacturer Frucor Beverages Group for around €136m, and acquired an initial 40% stake in US organic yogurtmaker Stonyfield Farm. At the close of the year Danone also announced formation of a joint venture with Egyptian food group Rachid to launch its Lu biscuits and other brands in the region. In 2002 it increased its stake in leading Polish water bottler Zywiec Zdroj to 88%. The group also continued to concentrate its product lines, selling off the Galbani cheese and cold meats business to private equity fund BC Partners for €1bn.

In 2002 the group strengthened its water business, acquiring leading a number of home and office delivery companies. Chateaud'eau International, acquired from Suez Group, was the market leader in this sector in France, and also held strong positions in Italy, Spain and the UK, where the group also acquired Sparkling Spring Water. In 2003 the group spent many months negotiating the possible takeover of Russian fruit juice and dairy products business Wimm-Bill-Dann. Talks ended in disagreement at the end of the year. The group also consolidated its presence in Turkey, buying out the partner in its own business in that region, Sabanci, as well as the rival dairy business previously owned by Nestle.

In summer 2005, Danone's share price surged on the back of rumours that it had become a takeover target for PepsiCo. The industry buzz persisted despite denials from both companies, but were finally quashed after French politicians and cultural commentators vowed to fight any such deal, claiming that sale of such a national jewel to an American company would be "scandalous" and a "direct attack" on the French national identity. Despite such concerns the group continued its steady divestment of non-core brands. Lea & Perrins sauces and HP tinned foods and sauces were sold to HJ Heinz in 2005 for €700m. Chinese sauces brand Amoy was sold to Ajinomoto for around €190m in early 2006. Virtually all of the group's biscuits division was sold to Kraft in 2007.

Last full revision 16th August 2017

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