After weeks of speculation in the French press, Danone has named Antoine de Saint-Affrique as its new Chief Executive, effective 15 September.
De Saint-Affrique comes to Danone from Barry Callebaut, where he initiated a planned succession and announced his intention to leave the chocolate supplier in April of this year. Prior to his spell at Barry Callebaut, the executive headed up the Foods division at Unilever.
De Saint-Affrique joins Danone after a period of uncertainty that saw the ousting of long-time Chairman and Chief Executive Emmanuel Faber.
In March, Danone’s board of directors bowed to pressure from activist investors and announced that Faber would leave the company with immediate effect. Activists cited governance issues (holding both Chairman and CEO posts) and perceived business underperformance as cause for the backlash against Faber.
Danone benefits from a strong position in health and wellness foods. It is the owner of leading yogurt brands Activia and Actimel and has a desirable footprint in plant-based products through Alpro in Europe and Silk in the US. Activist investors argued that these strengths have failed to translate to superior sales and profits.
Danone did not to achieve targets, set in 2017, for organic sales growth of 4-5% and an operating margin of 16% by 2020. In October, the company unveiled a new strategic plan with somewhat less ambitious goals. A month later, the group revealed 2,000 job cuts and the adoption of a local regional structure in an effort to generate cost savings of €1bn - an initiative Danone has dubbed Local First.
However, this cost-cutting spree failed to satisfy Faber's critics. The clash between the Frenchman and outspoken investors was also widely chalked up to the former’s commitment to driving Danone’s sustainability agenda.
Faber, who took over as Danone CEO in 2014, was one of the most vocal advocates in business for a more responsible capitalism, where businesses serve the interests of shareholders, the environment, its partners in the supply chain and society at large. When they approved the change in the company’s legal status to entreprise à mission last year, he famously quipped to shareholders that they had ‘toppled the statue of Milton Friedman’.
Some quarters believe that this multi-stakeholder outlook came at the expense of top line growth, business execution and, at the end of the day, shareholder returns.
So, what does de Saint-Affrique’s appointment suggest about the future direction of the French Alpro-to-Activia manufacturer?
‘This marks a new chapter’
Announcing the news, Danone Chairman Gilles Schnepp said that de Saint-Affrique is ‘the best person’ to ‘lead Danone through the next phase of our evolution’.
“This marks a new chapter of leadership and a continuation of how we, as a Board, have been transitioning governance at the company for a few weeks already. We unanimously agree that Antoine de Saint-Affrique is a standout leader in the consumer goods world. He has a distinguished track record of innovation and delivery. Importantly, he brings the right blend of strategic vision, international consumer goods experience, and operational execution skills to Danone.”
Indeed, if we look to the strategic direction spear-headed by de Saint-Affrique during his time at Barry Callebaut, a focus on ‘innovation and delivery’ is evident. Since 2015, when he took the helm, Barry Callebaut Barry Callebaut has focused on a disciplined execution of its growth strategy, while building capacity and strengthening its business model to boost performance.
The company’s four strategic pillars are: expansion, innovation, cost leadership and sustainability. Under de Saint-Affrique, Barry Callebaut was able to balance improved business execution with an evolving sustainability drive. This year, for instance, the Carbon Disclosure Project gave it top raking for climate engagement in its supply chain and the group announced its ambition to move beyond deforestation free in its cocoa supply and become ‘forest positive’.
Gilles was quick to emphasise that sustainability would remain key to Danone moving forward: “Antoine’s proven ability to successfully deliver a purpose-led growth strategy in a sustainable way fits well with our Mission and long-term goals.”
Likewise, de Saint-Affrique focused in on the importance of the company’s sustainability agenda. “I have tremendous admiration for Danone’s rich heritage and pioneering spirit in all fields: its strong and innovative portfolio of brands that have brought health through food to people around the world for so long; the dual social and economic project which has been at the heart of the company’s purpose for decades; and its strong and unique people culture which respects both diversity and inclusivity.
“I believe Danone has significant potential to continue to shape and contribute to how people eat and drink globally.”
Pascal Boll, an analyst with Stifel, said striking the right balance between business execution and sustainability will prove a ‘positive’ for Danone.
Pointing to his experience at both Barry Callebaut and Unilever, Boll flagged de Saint-Affrique’s track-record of building and executing ‘a strategy focused on profitable growth [and] strong cash flow generation, while balancing a trustworthy sustainability strategy’.
Highlighting the incoming CEO’s international experience as another bonus, Boll concluded: “[This] is the right way to go at Danone as well, after profitable growth has disappointed shareholders for many years and sustainability dominated the agenda under Emmanuel Faber.”
