Yogurt Giant Danone Posts an Unappetizing Job Ad
March 02 2021 - 8:22AM
Dow Jones News
By Carol Ryan
Investors have soured on the maker of Dannon yogurt. A proposed
management change isn't enough of a sweetener.
After a board meeting on Monday, Paris-based Danone said that
Chief Executive Officer Emmanuel Faber will step aside. The boss
has been trying to save his job since Wisconsin-based investor
Artisan Partners last month declared a 3% stake and said it wanted
him out. Danone also has activist hedge fund Bluebell Capital
Partners among its unhappy shareholders.
The new CEO may not have a free rein. Mr. Faber will stay on as
chairman and wants to push ahead with a restructuring -- his second
major attempt at an overhaul in seven years -- that is unpopular
with certain investors. The company's shares fell 1% in early
European trading Tuesday, perhaps a sign that shareholders don't
believe much can change under this setup.
The person who takes on the role needs to fix years of poor
performance. During Mr. Faber's tenure, which began in late 2014,
Danone has delivered total annual shareholder returns of 3% in
dollar terms. That is less than half what European food peers
Unilever and Nestlé managed over the same period and below what
Campbell Soup delivered with a far less wholesome portfolio of
brands.
Danone's lucrative baby-food business is under pressure in
China, where competition from local brands is heating up and
birthrates plummeted 15% in 2020. Artisan Partners have also argued
that Danone should sell off its cheaper water brands -- a step
Nestlé has taken -- and traditional dairy business. Both categories
are becoming commoditized as private-label rivals muscle in.
In Danone's defense, when Nestlé's current CEO Mark Schneider
took over in 2017, investors wondered whether he could really shake
up the business while his predecessor stayed on as chair. Yet he
has since successfully revamped the Swiss food giant.
Danone may not get the benefit of the doubt. The current
management team has lost investors' trust. Despite overpaying for
U.S. dairy-alternative player WhiteWave in 2016, the company has
been losing share to upstarts like oat-milk maker Oatly in the
booming plant-based food and drink market. This may be part of a
pattern: Dannon was also slow to react to the threat posed by Greek
yogurt brand Chobani in the U.S. several years ago.
Danone may feel that it has come up with a fair compromise, but
it will likely leave investors hungry for more.
Write to Carol Ryan at carol.ryan@wsj.com
(END) Dow Jones Newswires
March 02, 2021 08:07 ET (13:07 GMT)
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