Danone International, the maker of Activa yogurt and Evian water, announced a major restructuring in response to the global health crisis, saying it would reorganize into five geographic zones and add six members to its executive committee. It is also kicking off a major cost-cutting initiative to increase margins.

The global pandemic has accelerated a number of the patterns of the food revolution and altered others,” Chief Executive Officer Emmanuel Faber said, adding that Danone’s adaptation plan could be summarized as “local first.”  

Under the restructuring, the company would be organized into two macro-regions led by Shane Grant for Danone North America and Véronique Penchienati-Bosetta for Danone International.  There will also be new heads of five smaller geographic zones.

Danone is also planning to cut between 1,500 and 2,000 jobs in local and global headquarters, which it is considering relocating from Paris. 

It also may sell parts of its portfolio, according to the Wall Street Journal. “It recently put its Vega protein powder brand under strategic review,” the WSJ said. 

Danone reiterated its 2020 full-year guidance for 14% recurring operating margin, despite challenging fourth-quarter conditions by lockdowns in Europe. 

It said it expected the restructuring would lead to savings of nearly $1.4 billion by 2023, including a 20% reduction in overhead costs and $2.14 billion in free cash flow.  

Total one-off costs related to the reorganization initiatives are expected to be around $1.66 billion for the 2021-2023 period. 

In this reinvention of food, the most prominent paradigm accelerated by the pandemic is undoubtedly the trend toward local. It is a systemic evolution whereby the diversity of dietary habits rooted in their local cultures is now considered as a key security and resilience factor for global food systems,” Faber said. 

It is also a major political trend with the strong emergence of national food sovereignty narratives in many countries. It is finally and for long a consumer trend where many perceive local as a way to regain control over their food.” 

(Photo by DENIS CHARLET/AFP via Getty Images)

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