Étude des entreprises Danone & Nestlé (document en anglais)

Danone

The brand has been created in the 70’s after the merger between the two French glassmakers: Glaces de Boussoirs and Berrerie Souchon Neuvesel.

First called Boussoirs Souchon Neuvesel, BSN started with 150 Em net sales in flat glass and packaging and from 1970, the group moved into the food business with the acquisition of the Kronembourg breweries.

In 1973, BSN merged with Gervais Danone to become the French leader in food manufacture. In the following years, the group continued to expend into the food sector by broadening its product range but also by entering into new geographical regions.

In 1994, BSN is renamed Danone and few years later, in 1997, Danone is taking a crucial decision: to concentrate on 3 core businesses that are the fresh and dairy products, drinks, biscuits and cereals. For that, it had to sell many non-core businesses in aim to focus more on the actual strategy.

Let’s have a look at some data to better understand the strategy of the group:

- Fresh and dairy products (yogurts, desserts, children’s food) = 47% of net sales

- Drinks (bottled water) = 27%

- Biscuits / cereals = 23%

Also, Danone is the leader in volume in the bottle of water industry with it’s 2 leading brands: Evian and Volvic and is the top selling brand of bottled water in Indonesia (Aqua) that represent 11% of market share with 16,3 billion liters sold in 2003.

SWOT DANONE

Strengths Weaknesses

Strategy - Concentration of the financial and human means on businesses with strong growth

- Strategy of mergers and acquisitions and partnerships

- Geographical balance between developed countries and emerging countries

- Focused actions on a certain number of limited brands

Advertisement investments - Strong communication and advertisement

- Definition of the advertising strategies in adequacy with local consumer habits

Production / distribution - Extension of its target clientele and its distribution network thanks to its partnership with Coca-Cola

- World leader on the HOD market - Different legislations and rules following the distributed countries

- Difficulties on the Latin America market

- Use of the Coca-Cola Network for the production and distribution

R&D and Marketing - Good CRM

- Transverse offers allowing to federate the clientele around other products of the Danone group

- Permanent innovations according to consumer needs

Analyze:

Danone is actually the world bottled water leader in volume. This leadership is first forged on a massive presence in Europe where the consumption is strong. However, other indicators have served this position, like the mergers-acquisitions strategy of Danone or its partnerships in terms of distribution and marketing. Those partnerships have been made to consolidate its advantage over its competitors.

The principal strength of Danone was to start its business on the emerging countries market by adapting itself to the local consumption. This fast and efficient adaptation has shown its effiency in terms of logistic.

Another strength that makes the reputation of Danone today is the narrow relation that the group was able to develop with its consumers. This privileged relation entails an important development of customer loyalty of the customers to the range of product Danone. Finally, the importance of the investments assigned to the innovation contributes completely to make Danone a leader on the market of the bottled water.

The weaknesses of Danone, not numerous, are not to be neglected. In fact, because of its constant geographical development, Danone permanently has to face the local constraints of adaptation. These constraints are apply to the product in it or on its marketing. Finally, it is important to remind that Danone is dependent on some of its competitors at the level of the distribution (Coca-Cola in the United States, Kirin Beveradge Corporation in Japan).

Opportunities and threats of Nestlé and Danone

Opportunities Threats

Market - Explosion of the bottled water consumption

- Distrust in the respect of tape water

- Water benefits from a higher growth to that of the other drinks without alcohol

- HOD market in growth and high growth rate for the future

- Important notoriety of brands (image, quality and health) - Important number of mergers and acquisition of challengers (Coca-Cola and Pepsi)

- Development of the number of brands

- Specific legislation on each market

- Strong recognition of the local production from

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