Danone plans to aggressively downsize its business by up to 2,000 jobs, in part owing to pressure from poor bottled water sales. Credit: ricochet64 via Shutterstock.

Danone plans to aggressively downsize its business by up to 2,000 jobs, in part owing to pressure from poor bottled water sales. This shift in priorities is a likely sign that Danone committing to shift its highly diversified portfolio towards the development of plant-based products.

Other large FMCG companies such as Unilever and Nestlé have made similar commitments to change their focus to align with this growing trend. Even retail giants, Tesco and Kroger have recently commented on how they will up their proportion of plant-based stock. These statements made by influential businesses will cause ripples throughout the FMCG space and accelerate the bring more support for significant changes like Danone has displayed here.

GlobalData’s recent survey shows that *over a third of consumers in China strongly or somewhat agree that they are on a budget when shopping for the household. This will mean that smaller, on-the-go water bottle types are less of a priority, as value-conscious consumers are more likely to continue buying in bulk.

Along with the #BoycottFrance movement in the Middle East and North Africa (MENA) region, which is encouraging a widespread boycott of French-made products, are both clearly motivating Danone to shift priority towards new trends such as the ever-increasing demand for plant-based products, particularly in Europe and Asia. Although some countries carry the small potential for progress in the bottled water space, particularly UAE and Saudi Arabia, Danone’s best move would be to change lanes and opt for a stronger focus on different opportunities away from the ongoing boycott. By curtailing its work towards competing in the struggling bottled water space, Danone’s likely to use this restructuring to diverge its focus onto plant-based yoghurt, milk and cheese.

By contrast, around *1 in 4 consumers in China and India have admitted to buying more or stockpiling plant-based dairy products, showing a significant shift in purchasing behaviours of the region when compared against water consumption. Danone’s increasing rate of mergers and acquisitions (M&A) with small innovators in the plant-based space could be seen as a gamble by investors, but with the potential savings estimated at over €1bn by 2023, with 20% drop in overheads, Danone is giving itself more chips to place on the board, to play for a heightened potential for reward.

*GlobalData 2020 Coronavirus (COVID-19) Recovery Consumer Survey Results –  Published November 10th, 2020

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