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Danone spells out functional future

Danone CEO Frank Riboud has told TIME magazine that the company's vision to deliver healthy foods to people at any stage of their life — a process it began a decade ago — is now coming to fruition. Danone recently sold its biscuit division to Kraft for $7.4 billion and paid $17.2 billion to acquire Royal Numico, which specialises in infant nutrition and hospital meals, in a move that will boost the healthfulness of its offerings.

"We used to say that the mission of the company was to bring health through food to the maximum number of people," Riboud told TIME. Now that Danone owns Numico, "we can add to that mission 'from the beginning of your life to the end of your life'," he said.

Danone has also shed other non-core businesses, such as Kronenbourg beer, and now specialises in dairy and bottled water.

"We were born with this health positioning," said Riboud. "With the new Danone, I think we can say that 98 per cent of total sales will be functional health and nutrition. It's very different from the competitors," Riboud said.

While Danone has been criticised for paying too much for Numico, Laurent Sacchi, Danone's senior vice president of communications, said the move was logical given Danone's direction. "We were more and more convinced that due to health issues, long-term-speaking, cookies were going to be in trouble," he told TIME. "In some countries obesity will be the new tobacco," he added.

Danone yogurt and milk-based desserts grew 9.2 per cent last year, with growth as high as 20 per cent in Argentina, Mexico and Brazil, and 35 per cent in Russia. Functional yoghurt Activia registered sales of $1.8 billion globally, while its drinking yoghurt, Actimel, had sales of $1.4 billion. Bottled water grew 14.8 per cent in 2006, while Numico grew nearly 12 per cent.

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