France's leading food group, Danone has restructured its portfolio several times in recent years to concentrate on what are now four 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, Kraft.
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Adbrands Weekly Update 10th May 2018: Ads of the Week: "Konfusion Kitchen". Everyone loves a good Candid Camera gag! Vice's inhouse creative unit Virtue put together this brilliant practical joke poking fun at trendy restaurants which try to keep abreast of every latest food fad. Where better than Copenhagen, a city with more trendy restaurants per square mile than almost any other? It's notionally a promo for Danone's plain and simple natural yoghurt, but you'll have forgotten who the client is within half an hour of watching the film. You won't have any such trouble remembering some of the brilliantly satirical dishes, though, not least slow-cooked ostrich egg, which diners have to cook themselves with an ordinary table lamp.
Adbrands Weekly Update 6th Jul 2017: Danone is to sell its American organic yoghurt brand Stonyfield to French countrymate Lactalis, known primarily in the US for its cheese brands President, Sorrento and Galbani. Danone had put the business up for sale to win regulatory approval for its acquisition of Whitewave. The price tag is $875m. Stonyfield had sales of around $370m last year. It will mark Lactalis' debut in the US yoghurt market.
Adbrands Weekly Update 6th Apr 2017: Danone has agreed to sell its US organic yogurt brand Stonyfield in order to appease regulators over its planned acquisition of WhiteWave Foods, makers of Alpro and Silk, first announced almost nine months ago. It has secured permission to seek buyers for Stonyfield after completion of the WhiteWave deal.
Adbrands Weekly Update 7th July 2016: Danone announced plans to broaden its presence in the fiercely competitive US chilled dairy sector, unveiling a deal to acquire local producer WhiteWave Foods for around $10bn, or $12.5bn including the target company's debt. It's 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.
Adbrands Weekly Update 21st April 2016: Ads of the Week "Evian Baby Bay". It's been a while but the Evian babies are back. This latest installment, from longtime partner BETC, is even more adorable than 2014's Spiderman tie-in (as well as being significantly less over-commercialised). It also seems to say something more profound about the idea of "living young" and healthy. Great digital effects as you'd expect, and the "aaahhh!" dial is definitely set to 11. Lovely.
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Free for all users | see full profile for current activities: 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. See full profile for current activities
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