Stephen Wynne-Jones meets Pablo Perversi, President Europe, Danone, and Ayla Ziz, SVP Sales, Customer & Commercial Europe, Danone. This article first appeared in ESM's September/October 2024 edition.
It may be more than 50 years since former Danone chief executive Antoine Riboud introduced the so-called ‘Dual Project’ – outlining why “corporate responsibility does not end at the factory gate or the office door” – but this principle is still very much at the heart of how the French firm does business.
That mindset led to the introduction of the Danone Impact Journey, in 2023, a reframing of the firm’s sustainability voyage around three pillars – Health, Nature, and People & Communities – through which the business would seek to promote sustainable food production, improve access to healthy nutrition, enhance the well-being of its workforce, and engage with communities.
Danone, which reported €27.6 billion in sales last year, understands the need to balance this holistic mindset with solid business acumen – the Renew Danone strategy, launched in 2022, addressed some of the areas in which the business has underperformed – and as it looks ahead to the second part of the decade, it is dedicated to sustainable value creation.
“Danone today is very different from the Danone of two years ago,” says Pablo Perversi, president, Europe, Danone, of the period since the introduction of the Renew Danone strategy. “We now have the right fundamentals in place to turn Danone into a truly science-based, consumer- and patient-centric company, with an even stronger focus on our unique health-focused mission.”
Innovation Drive
Innovation is a core pillar of the Danone operating structure. At this year’s Consumer Goods Forum Global Summit, in Chicago, ESM had the opportunity to discover the widening range of categories in which the company is building a presence, such as gut health, plant-based, medical nutrition (its Nutricia tube-feeding range was recently reformulated to feature a higher plant-based protein content, and a new Nutricia Fortimel oral nutrition range was launched for cancer patients), as well as its traditional food-and-beverage presence.
Perversi is particularly proud of the “major successes” that the business has seen in high-protein products – high-protein dairy, which the company sees as a €60 billion opportunity, is growing by “high single digits,” he notes. Danone also scored a valuable win during the recent Paris 2024 Olympics, when cyclist Pauline Ferrand-Prévot, the ‘face’ of its HiPRO+ protein dairy brand, scooped a gold medal for France.
Danone actively integrates customer needs and market trends into its innovation process, with Ayla Ziz, SVP of sales, customer and commercial, Europe, Danone, noting that the business engaged with more than 9,000 shoppers in key European markets in shaping its development process.
“[Following this,] we’ve highlighted the key importance of sustainability and health as parameters of choice for retailers and for products,” Ziz says. “We’ve also seen that our categories are key to building sustainability perception.”
This is borne out in the company’s portfolio, with 89% of Danone products by volume sold in ‘healthy’ categories. Here, too, there is room for improvement – Danone is on a mission to reduce the sugar content of its dairy and plant-based products aimed at children, and it is confident that 95% of its products in this category will have a sugar content of less than 10g per 100g by 2025.
Collaboration has also played an important role in furthering Danone’s health goals, Ziz adds, citing a 2023 collaborative venture with Metro AG, the aim of which was to “nudge Metro AG clients – restaurants and out-of-home sectors – towards embedding healthier and more sustainable recipes and ingredients into their menus.” This led to a 10% increase in turnover from healthy products, and the collaboration is set to be repeated this year.
Climate Transition Plan
As Danone has enhanced the holistic benefits of its products, so its environmental footprint has improved. The company recently published its Climate Transition Plan, which sought to outline a concrete road map for decarbonisation and achieve net-zero emissions across its full value chain by 2050.
“At a time where more and more retailers are requesting data on our CO2 reduction road map, we believe it’s extremely important for Danone to remain at the forefront of the decarbonisation efforts in the industry,” says Perversi, who adds that the company is on track to have achieved an absolute emissions reduction of 34.7% by 2030, compared to a 2020 baseline. This is being partly driven by a recent partnership with the Environmental Defense Fund (EDF), to help the company reduce methane from fresh milk production by 30%.
“We must ensure that the cost of climate transition is better shared across the agrifood value chain.”
This path hasn’t been entirely smooth, however, with recent inflationary challenges placing the focus more on lowering prices than driving sustainable, shared value.
“We have operated in a complex, ultra-competitive space in a context of inflation in the past couple of years,” says Perversi. “Quality, innovative, sustainable food, produced in Europe, should be accessible and affordable for consumers, but there is still a need to work together to ensure that this cost is better shared throughout the food value chain. In particular, relations between manufacturers and retailers, or retailers’ alliances, should move beyond the mere logic of negotiating ever-lower prices to also take into account the sustainable value generated by our products for our suppliers, our customers and our consumers.”
The company also acknowledges that tackling Scope 3 emissions – accounting for as much as 95% of the company’s carbon footprint – remains a challenge.
“We are integrating carbon footprint reduction in all of our innovation and reformulation processes, developing more low-carbon dairy, plant-based and hybrid product offers and supporting breakthrough innovations to encourage the adoption of sustainable diets, in line with our mission of bringing health through food to as many people as possible,” Perversi adds.
Danone has been acknowledged for its efforts in this area – the company is one of only a handful that achieved a Triple A rating from environmental non-profit CDP, in the areas of climate change, forest preservation and water security, and it was one of the first to have its 1.5°C science-based targets, including Forest, Land and Agriculture (FLAG) emissions, approved by the Science Based Targets initiative (SBTi).
Sustainable Growth
An oft-used phrase within Danone is, ‘Sustainability without performance has no impact. Performance without sustainability has no future.’ It’s a mantra that encapsulates the company’s commitment to intertwining health and sustainability with business success. An example of this integration was seen in 2023, when Danone shareholders voted on a resolution that linked the company’s sugar reduction targets to the performance conditions applicable to its directors and senior executives.
“We are committed to a model of sustainable and profitable growth where economic and social responsibility go hand in hand,” says Ziz. “We truly believe that when we support our farmers towards the transition to more regenerative agriculture, for instance, we are not only working on environmental sustainability, but also on economic sustainability and growth. Making agriculture more resilient to the climate crisis contributes to securing a continued high-quality milk supply for our products, and to producing products that are in line with consumers’ expectations.”
Referencing the late Antoine Riboud’s call to action some five decades earlier, Perversi adds that Danone has a “long history” of embedding social and environmental responsibility into its business.
“This is a long-run effort, and one that we keep progressing, year after year,” he says.
