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Business Strategy and Economical analysis of Danone

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Introduction

________________ Table of Contents ________________ 1. Introduction 1.1 DANONE Company Profile Key market segments 1.2 Company Hierarchy 2. Strategic, Social and economic analysis Product Life Cycle Future Trends in Market 2.1 SWOT Analysis for Actimel 2.2 PEST Analysis 3. Strategic, social and economic choice 3.1 Ratio Analysis 3.2 Value-added chain analysis 4. Strategic, social and economic implementation 4.1 Competitive analysis. Porter's five forces model 4.2 Analysis of Competition 4.3 Segmentation and Targeting Recommendation 5. Conclusion 6. References ________________ 1. Introduction ________________ The functional food industry, consisting of food, beverage and supplement sectors, is one of the several areas of the food industry that is experiencing fast growth in recent years. (1) It is estimated by BCC Research that the global market of functional food industry will reach 176.7 billion in 2013? (2) with a compound annual growth rate (CAGR) of 7.4%. Specifically, the functional food sector will experience 6.9% CAGR.? (2) This kind of growth is fueled not only by industrial innovation and development of new products that satisfy the demand of health conscious consumers but also by health claims covering a wide range of health issues. Actimel is a healthy functional yogurt drink, produced by the French company DANONE, which ?helps support your body?s natural defenses?. (1) Actimel has taken advantage of this trend towards a healthy lifestyle and has strengthened its positions in the functional yogurt drinks market. 1.1 DANONE Company Profile ________________ Groupe Danone is a French food-products multinational corporation based in Paris. It claims world leadership in fresh dairy products with Full-year 2012 global sales of ?20.9 bn, Trading operating income of ?3,000 million in 2012? (8) and net income of ?1,800 million with a Free cash-flow of ?2.1 billion. ?(8) The financial year results reflect Solid 2012 performance, with contrasts from region to region; sales down -3% in Europe; growth of over +10% in emerging markets and North America combined. +5.4% like for like growth in turnover value despite the negative effects caused by the world economic crisis. ...read more.

Middle

Probiotic bacteria awareness Threats 1. New entrants 2. Increased competition 3. Stores own brand 4. Increase in cost of milk and production 5. Consumer unawareness on benefits of good bacteria 6. Government regulation on health claim of probiotic brand 7. Lower prices from competitors 2.2 PEST Analysis ________________ The grid below highlights some of the factors that affect the market presently and therefore gives an idea on the way forward in the present market environment. POLITICAL Government policy: Political factors have a vast impact upon the regulation of Danon?s yogurt drink market. The UK Coalition Government?s ?Responsibility Deal? is being developed with an objective to enable, encourage and incentivise consumers to adopt a better diet and to increase their levels of physical activity as part of a positive decision to lead a healthier lifestyle eg. Five a day. ?(14) The issues such as how stable the political environment should be in different countries, how government policies affect tax on the company, what the government?s policy on marketing ethics and economy is, and how long the payment cycle works in certain countries has always been the matter of consideration by Danone. Economic Economics factors include interest rates, taxation changes, economic growth, inflation and exchange rates which can effect on companies profitability. Actimel market environment is highly competitive. Multinational Brands such as Yakult, Benecol and stored own brand with their superior stature are the major competitors in the ambient grocery market. Retailers are pressurizing FMCG (Fast-Moving Consumer Goods) producers to reduce prices of their products. This in turn has adverse effects of the Premier foods profits. Consumers also do not want to buy expensive product or brands due to current economic tide. The UK economy analysis in 2011 indicates that UK had a difficult year according to the high unemployment, spare capacity and government borrowing. UK gross domestic product (GDP) in volume terms decreased by 0.3 per cent in the fourth quarter of 2011 and a further 0.2% in the first quarter of 2012, causing concerns for a ?double-dip recession?.?(21) ...read more.

Conclusion

DANONE want to do that through the quality, the healthy and the real taste of its products. But also through the creativity, the innovation and the customer's service. This company makes huge investments in R & D in order to give responses to the market demands. The quality of the raw materials is high in order to make the most quality products. Furthermore DANONE offers detailed information of its products and the company so the customer feels more acknowledged when he makes the achievement. A good example of this is Actimel. This product is currently the market leader in the functional yogurt drinks category and has been for many years. Actimel is part of DANONE’s FDP business line which generated the highest income for DANONE (between its four different business lines). Actimel has recently withdrawn an application of approval by the EFSA for its health claim; reason for this being ‘lack of clarity from the EFSA’. If Actimel manages to get EFSA approval for its health claim it will increase its sales value and also its market share in the functional yogurt drinks market. In the meantime Actimel should try and target a wide range of demographics through advertising and marketing campaigns in order to keep up its sales. The yogurt drinks category has been challenging for most participants in recent years, with weakened demand for functional drinks and EFSA’s rejection of key functional health claims, leading to a further fall of 3% in value sales between 2010 and 2011. Three of the top four brands – Actimel, Müller Vitality and Yakult – all experienced sales declines in 2011, with Müller Vitality slipping into fifth place behind Yakult. Trade sources argue that the higher price point of yogurt drinks versus spoonable yogurts is alienating some consumers, there is increasing evidence of brands relaunching their range of yogurt drinks with new wider positioning statements targeting the whole family, rejuvenating the range of flavors available and introducing new packaging. ________________ 6. ...read more.

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