Danone has today announced that it is is aggressively downsizing its business by up to 2,000 jobs in part owing to pressure from poor bottled water sales.
Says Jim Toy, Consumer Analyst at GlobalData: “GlobalData’s recent survey shows that over a third of consumers in China strongly or somewhat agree that they are on a budget when shopping for the household. This then means that smaller, on-the-go water bottle types are less of a priority, as value conscious consumers are more likely to continue buying in bulk.
“This, along with the #BoycottFrance movement in the Middle East and North Africa (MENA) region, which is encouraging a widespread boycott of French-made products, are both clearly motivating Danone to shift priority towards new trends such as the ever-increasing demand for plant-based products, particularly in Europe and Asia.
“Although some countries carry small potential for progress in the bottled water space, particularly UAE and Saudi Arabia, Danone’s best move would be to change lanes and opt for a stronger focus on different opportunities away from the ongoing boycott. There is already a strong appetite for brand new plant-based products in Asia, led by brands like Oatly and Yili.
“By curtailing its work towards competing in the struggling bottled water space, Danone’s likely to use this restructuring to diverge its focus onto plant-based yogurt, milk and cheese. By contrast, around *1 in 4 consumers in China and India have admitted to buying more or stockpiling plant-based dairy products, showing a significant shift in purchasing behaviours of the region when compared against water consumption.
“Danone’s increasing rate of mergers and acquisitions (M&A) with small innovators in the plant-based space could be seen as a gamble by investors, but with the potential savings estimated at over €1bn by 2023, with 20% drop in overheads, Danone is giving itself more chips to place on the board, to play for a heightened potential for reward.” For more visit globaldata.com
