Danone Products is one of the world’s leading companies in the domain of food processing. The company which is headquartered in Paris, France. The company specializes in yogurt and other dairy products in addition to which they have the presence in domains like Fresh Dairy Products, Waters, Early Life Nutrition, Medical Nutrition and Health & nutrition.
The company is committed to the health of their customers and focuses on making products with the most superior ingredients. In addition to plant-based yogurts, the company has milk powders for various needs. The company has operations in more than 130 countries and the company registered an annual turnover of 22 billion Euros in the year 2016.
Strengths in the SWOT analysis of Danone
The following are the strengths of Danone:
- Presence in multiple categories: Danone Products has operations in various domains like Fresh Dairy Products, Waters, Early Life Nutrition, Medical Nutrition and Health & nutrition. Their main focus is on milk and nutrition with a market share of 50 % followed by early life nutrition with a share of 22 %, water of 21 % and medical nutrition of 7 %.
- Quality of products: The products by Danone are developed using superior quality raw materials and processes that are graded in terms of quality. They focus on quality from the customer point of view while guaranteeing that there is the end to end assessment of quality across the value chain.
- The popularity of yogurt: Yogurt has become very popular today and its health benefits are trending everywhere on the Internet. The company specializes in Greek Yogurt which is one of their top-selling products.
- Science: There is a clear focus on the science of food processing in Danone and the research is centered completely on the usage of healthy and natural processes which are proven to be good for the target group and which are age appropriate.
- Innovation: The company has a number of Research Centres and other R&D facilities across the world where they employe around 400 scientists who are passionate about research and development.
Weaknesses in the SWOT analysis of Danone
Some of the key weaknesses of Danone are :
- Low growth in Asia: Most food processing companies are focusing on Asian countries for their revenues. But the growth in China and India for Danone are slowing down and these market are led by domestic companies. This affects the overall growth prospects of the business.
- Focus on long-term growth: The company is focusing on long-term growth as part of their strategy and because of the fluctuations in the environment the margins are suffering badly and the company finds it immensely challenging to sustain its momentum.
- Focus on premium segments: Danone makes premium products and in most emerging economies their product does not get enough volumes of sales primarily because of their high prices. The local players get an upper hand primarily because they are able to provide superior quality products at economical prices.
- High raw material costs: Dairy which is one of Danone products key raw materials is increasing in costs. Moreover, the cost of sourcing the raw materials are becoming difficult from various parts of the world is becoming cumbersome and highly expensive for the company. Though this trickles into their products these products do not have a market in many emerging economies where companies look for volumes.
- Poor Distribution: In comparison to other brands that are sold in India, the distribution channel of Danone is not good enough and does not get to all parts of the country but targets mostly cities and metros.Thus the brand will not get enough volumes.
Opportunities in the SWOT analysis of Danone
Some of the opportunities include :
- Greek Yogurt: The Greek yogurt is thicker than the regular yogurt and this needs three times more milk than the latter which makes it richer.Greek Yogurt is extremely popular in the Western countries and the sales are expected to grow in the next many decades.
- Steep growth potential in emerging economies: There is a strong preference for curd in emerging economies as more and more people are growing concerned about the additives in milk as well as the calories in it.This will improve the market for the company in India and China.
Threats in the SWOT analysis of Danone
Some of the threats include:
- Stiff competition: The company faces competition from like Procter & Gamble, Nestle and Unilever, and also from domestic players like Amul and Mother Dairy.