Danone Aims to Remain a Giant
In the Changing World of Food Products
By Dale Buss
Danone was a giant in the traditional world of CPGs in which meat, dairy and highly processed foods held sway across the globe. Now the Paris-based company is trying hard to remain a giant in the new world of CPGs that is rapidly tacking toward plant-based analogs for traditional animal-based products, less-processed foods, and a strong consumer preoccupation not only with what’s in the products but also how they’re produced – and then what happens to the packaging after the contents are gone.
So a company that once focused simply on being the biggest and best in its huge categories such as yogurt now is well into its transition toward something of a sustainability holding company, with a constantly evolving portfolio that includes the world’s biggest producer of plant-based “milks” and other dairy analogs and a new multi-million-dollar expansion of a plant in Pennsylvania that is only focused on making plant-based food. Even on its dairy side, Danone has launched initiatives to try to stay ahead of the game, such as a program to help U.S. dairy farmers practice regenerative agriculture.
The point is to make sure Danone is a survivor that will be among the woke companies still helping feed the world in a generation or two.
“We can play a vital role in advancing a sustainable food system,” Merjin Dols, senior director of open innovation and the circular economy for Danone, told CPGmatters recently. “Deep down in our DNA is this belief that food can change the world for the better,” he says, citing a major principle of a Danone “manifesto” about corporate purpose that the company issued a couple of years ago under new CEO Emmanuel Faber. “To create the world we want to live in, we need to redesign the food system to take better care of the one planet we have.”
Mariano Lozano, chief executive officer of Danone’s North American operations, is managing the company’s U.S. arm. He is constantly mindful of how much in transition the company must be and how significant the overall impact of Danone’s journey can be not just on itself, but on the CPG industry as a whole and on consumers.
“As a good, big food company, we have a role to play in terms of making the food system more sustainable as well as making it results-driven,” Lozano told CPGmatters several months ago. “We’ll also have a better planet for our kids.”
Among Danone’s efforts under Lozano, for instance, was the company’s drive to become listed in April 2017 as a Public Benefit Corp. in the United States, meaning that Dannon USA official embraced adding the interests of the general public, consumers and other stakeholders to its goals in addition to the best interests of traditional financial shareholders. In a significant way, Lozano’s efforts predated the recent declaration by a major group of American CEOs called the Business Roundtable that corporations should indeed consider the interests of a variety of stakeholders in addition to company shareholders.
Dols is on the front lines of helping his company make the leap from major player in the traditional CPG business to global pioneer in the food system of tomorrow. Central to Dols’ vision of how to do that is cutting food waste – drastically – and making foods and beverages the center of a new circular economy that will thrive in cities.
“Our current linear food system is unsustainable and depleted,” he said. “It’s built on the notion of using raw materials and converting them into products and using them – and then they go away. But actually, in this beautiful blue marble that we live on, there is no such thing as ‘away.’ The only thing that leaks out of our system is helium.”
Dols wants Danone to be a major architect of a new global industry that deconstructs “the old paradigm where the food system was divided between a number of large players that were, in Game of Thrones fashion, sitting in their castles and defending their big production and marketing and R&D platforms and building moats of intellectual property, and not-invented-here, and a transactional mindset.”
He continues, “Our role as a company – as a collective of more than 100,000 people who share this vision – is the role of a trailblazer, by leading the conversation and fostering an open exchange of new ideas within the company and within the ecosystem of millions of talented innovators around the globe, not just within Danone.”
It may seem an oxymoron for Dols to assume Danone can play that kind of leadership role when, after all, its dairy products are dependent on the milk from “ruminant” livestock that moo at the top of the hit list of climate-change activists.
But for one thing, Dols explains, Danone has tacked heavily into supporting “regenerative-agriculture” practices for dairy farmers. Second, he says, “As a company, we’re a lot more diversified than people think. We’re also the largest plant-based food company in the world. So we’re not betting on just one source of protein; we are betting on a multitude and diverse set of proteins and protein solutions.”
Dols said it’s unfortunate that the debate over the future of food “is becoming very polarized and black-and-white,” on Twitter and other social media. “The future of the food system can’t be caught in 140 characters no matter how much we would like to try. Our actions as a company can speak for that.”
For instance, he said, Danone has become committed to helping close the “knowledge and information gap” with farmers to help them institute more regenerative-agriculture practices, through initiatives such as boosting Danone North America’s soil-health research program.
The aim of the program is to identify ways to help regenerate soils, looking at enhancing organic matter and soil fertility with long-term benefits such as soil carbon sequestration, reduced chemicals use, soil water holding capacity, biodiversity and economic resilience of farmer communities. Danone’s key activities with participating grower and dairy farmer partners and third-party soil health experts include soil sampling, review of yield, grower engagement, data collection and analysis, first reports and field days with farmers to provide training around soil health best practices.
And just as the company’s product portfolio reflects crucial stakes in both plant-based and animal-based nutrition, Dols said it remains important for Danone to help farmers around the world who produce the commodities that are raw materials for both types of products.
“We need the complete toolbox of solutions for different crops and varieties of food that are culturally relevant and grow in local environments,” Dols said. “We need to move away from the debate of whether you are pro or against animals, whether you are vegans. There is no healthy agriculture-food system without animal husbandry. That doesn’t mean we don’t need a dietary shift, though, especially when you look at the developed world.”