Big interview
and the need to make money, between its commitments to the planet and its commitments to its shareholders. But does it, in fact, have to be this way? With Covid-19 hastening far-reaching changes to consumer behaviour, Danone is bracing itself for a world where financial success will be impossible to prise from environmental sustainability. Buoyed by new technology, helping executives make decisions seamlessly and at speed, Danone could yet regain the primacy it enjoyed in the days of Isaac Carasso – especially if the company’s new CFO has anything to do with it.
A real balls up Towards the end of our conversation, Juergen Esser and I talk football. We’re chatting at the start of July, and Esser’s native Germany have just been knocked out of Euro 2020 by the Three Lions. We all know how that story ended, but for the moment Esser is chastened. “I’m extremely passionate about football,” he says. “It’s a painful exercise for me as a German at the moment.” A reasonable point: it must be hard to lose to England after so many decades at the top of the footballing pile. Still, at least sporting trauma gives Esser a chance to take a break from his professional life – and what a year it’s been. In February 2021, Esser took up one of the most powerful positions in food and drink, as Danone’s chief financial, technology and data officer. Barely a month later, Emmanuel Faber, Danone’s CEO and Esser’s erstwhile boss, was ousted after pressure from disgruntled shareholders.
In part, the plotters were unhappy with the company’s lacklustre market performance. Over the past five years, Danone’s share price has remained more or less stagnant. That compares with Unilever and Nestlé, which have respectively enjoyed jumps of 30% and 45% over the same period. And that’s before you consider the struggles of the pandemic, which saw Danone’s overall 2020 sales slump by 6.6%, with Evian and other bottled water brands plunging even further. In short, Esser entered the fray at a difficult time – something the man himself freely admits. As he puts it, the past year has been “very challenging” for both his company and the food industry at large. Even so, the CFO isn’t totally despondent. Rather, Esser argues the pandemic has helped hasten a “food revolution” whereby Danone’s customers are becoming more discerning. Rather than buying whatever’s cheap and convenient, the crises of the past 18 months have, he suggests, inspired them to demand healthy, sustainable food that keeps them fit and their planet cool. That’s certainly reflected by the statistics. According to one 2020 survey, two-thirds of people now look for products that can help them live a more sustainable and socially responsible life, while half prefer to buy from companies that “take a stand” on social or environmental issues. It goes without saying, Esser adds, that these changes require fundamental readjustments for financial brains like his. “They impact
Finance Director Europe /
www.ns-businesshub.com
my job as a CFO – and they also revolutionise the way we measure value creation,” he explains. “We used to measure success in our industry by net sales, profit, or cash – whatever, you name the KPI. That definitely isn’t enough anymore. So as Danone, the way we impact the health of people, and the planet, will more and more be an intrinsic part of our performance management.” Of course, that’s easy to say in theory. In practice, there are hints that making the leap is far tougher. Though details are scarce, some observers have suggested that Emmanuel Faber was forced from his post after putting his company’s social responsibilities above its bottom line. Examine Danone’s financials – revenue is currently hovering at 2011 levels – and you can perhaps understand what they mean.
Talking my language
In 1980, Alpro changed the world. At a time when vegetarianism was still unusual – and veganism practically unknown – the brand cheerfully promoted several healthy plant-based products. Four decades on, and Danone’s Belgian subsidiary hasn’t lost any of its vim. In a September 2020 announcement, the company stated that it wanted to bring more “choice, variety and taste” to its range, adding two new ingredients to its recipe book. That’s shadowed by Alpro’s commitment to the environment. By 2025, the company says, it will use recycled packaging for all its products. At the same time, it will cut its water usage by 60%, and hopes to reduce its overall carbon emissions to zero. This balance of hard-nosed economics and righteous sustainability – boosting Alpro’s offerings while slashing its environmental footprint – is symptomatic of Danone’s response to Esser’s food revolution. Just as the CFO suggested, after all, Alpro is obviously no longer just worried about dollars and cents. How else to explain its rollicking dedication to protecting the planet (not least given vegan agriculture emits less carbon than flatulent cattle)? At the same time, though, Danone obviously sees in the rising consumer trend for flexitarian diets new opportunities for growth. As Esser himself puts it: “Creating a plant-based protein, packaging it, and making it available to a consumer, is
Juergen Esser, CFO, Danone
Regenerative agriculture is at the heart of Danone’s commitments to achieve net-zero emissions by 2050.
9
Danone
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41
