SWOT Analysis of Danone: Global Food-Products Company

Products & Services by Danone

Danone has four broad categories of products which are: dairy, plant-based nutrition, water and aqua drinks and specialized nutrition. Out of the aforementioned, dairy is its USP.

• Baby food
• Coffee
• Dairy products
• Dairy-free products
• Bottled water
• Dietary supplements

Competitors of Danone

The primary competitor of Danone are

• Unilever
• PepsiCo.
• Kraft Foods
• Nestle

Now that we understand the company’s core business, let’s delve into the SWOT analysis of Danone.

SWOT Analysis of Danone

A SWOT analysis determines the strengths, weaknesses, opportunities, and threats of a company. It is a proven management paradigm that allows Danone to benchmark its business and performance against that of its competitors and the industry as a whole. This is a great tool for identifying where the business is doing well, where it is failing, developing countermeasures, and determining how the business can grow.

To better understand the SWOT Analysis of Danone, refer to the infographics image below

Now first let’s begin with the strengths of the company from the SWOT analysis of Danone.

Strengths of Danone

The unique skills of a company that gives it an edge in gaining more market share, attracting more customers, and maximizing profits are known as its strengths. The following are Danone’s strengths:

• Superior Quality: One of Danone’s primary motto is to provide premium quality products that are healthy and nutritious and it is standing on its commitments which led it to become one of the world’s largest health-focused dairy providers.
• Greek Yogurt: Yogurt is Danone’s oldest product and the company has kept itself amongst global market leaders by following the recent health trend of greek yogurt.
• International Omnipresence: Danone is present in 130+ countries which allows it access to international markets including Bangladesh, India, Israel & China etc. and take advantage of profits from different sources.
• Joint Ventures: Danone has adopted a strategy of growth through joint ventures such as the brand signed joint ventures with Yakult in 2005 to cover India, Vietnam, China and particularly in fast-growing emerging markets which represent over 50% of its sales.
• Strong R&D Department: Danone has over four hundred scientists and several research labs including Danone institute of nutrition information across the globe which gives it an edge over its competitors.
• CSR Initiatives: Danone has started various initiatives like Nutrition prize, contributing to UN’s Sustainable Development goals, individual campaigns in various countries etc. which contributes to its goodwill in the society.

Weaknesses of Danone

Weaknesses are the areas Danone can work upon. Some of Danone’s weaknesses are:

• Improper Strategy: Upon further inspection, one can find out that the focus of all marketing efforts is long-term and that there are gaps in its short-term strategy formulation.
• Niche Market Segment: Danone’s premium pricing strategy allows its sales volume to reduce significantly as various lower economic sectors of the market go unexplored.
• Incompetency in the Asian Market: Danone’s presence in China, India and many other Asian countries contributes greatly to its sales value however it has been constantly falling due to local competition.
• Limited Supplier Contracts: Danone relies too much on a handful of suppliers for its raw material which increases the risk factor greatly.
• Limited Attention on Other Segments: Danone exclusively focuses on revenue from its dairy segment which often gets the other segments overlooked.

Opportunities for Danone

Opportunities are uncontrollable external circumstances that a person may be able to take advantage of. These external factors could give the company an advantage in the marketplace. Opportunities for Danone are:

• Fitness Movement: Several health issues and epidemics tend to threaten the lives of various people and as they move towards a healthier lifestyle, Danone can be among the first brands to introduce organic products.
• Plant-based Nutrition: The shift to veganism allows Danone to take advantage of this opportunity and diversify its product portfolio.
• Growing Markets: There are several countries like India which are growing markets especially due to the rising demand for dairy products.
• Acquisitions and Partnerships: Danone has established its presence in some of its largest markets like Egypt and France through various acquisitions and mergers which also opens up the prospect of several more.
• Product Diversification: Due to its rising revenue, Danone has the opportunity to invest its revenue in research and development which will increase the number of products and their features ultimately leading to it gaining a competitive advantage in the market.

Threats to Danone

Threats are those factors that have the potential to provide harm to the organisation in any form. The threats of Danone are as follows:

• Severe Competition: The competition is extremely cut-throat in the Food industry. Some of its chief competitors are Nestle, Kraft Foods, Unilever etc.
• Entry of New Competition: Due to the FMCG industry being an opportunistic, ever-evolving field, the entry of potential players in the market is easy.
• High Substitution Rate: Due to the availability of various substitutes like local distributors and local dairy plants available across several product categories, it is very easy for consumers to substitute Danone’s products.
• COVID19 Pandemic: COVID19 has caused a disastrous economic impact on economies and individuals which reduces the probability of consumers opting for dairy products that are labeled by brands like Danone, based on which customers are compromising on quality and thinking from the price perspective.
• Acquisitions: Danone business portfolio is an attractive takeover target for its competitors, namely Nestlé and Kraft Foods. Notably, in the year 2005, rumors of PepsiCo’s bid approach to acquire Danone surfaced causing Danone implementing industry protecting strategies.

This ends our elaborated SWOT analysis of Danone. Let us conclude our learning below.