CPG

Danone’s North American yogurt prez on how its coping with supply-chain issues

To simplify operations, the company looks to its lids.
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Danone

· less than 3 min read

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In the often overwhelming yogurt aisle at the grocery store, Danone accounts for a good chunk. With brands like Activia, Dannon, and Oikos, it has 32.2% of the yogurt market share in North America, per the company, plus 70% in plant-based yogurt with Silk and So Delicious.

But with great market share comes great responsibility volatility. Amid inflation and supply-chain constraints, Pedro Silveira, president of yogurt for Danone North America, told Retail Brew that the CPG giant has had to work to “stay ahead of the game.”

Lid adieu: Danone used supply-chain crunches as an opportunity to keep things simple. “There is one statement that comes to my mind all the time, which is, ‘Never let a good crisis go [to] waste,’” Silveira said.

With 400+ SKUs across 10 yogurt brands (plus various pack formats), Danone found it produced nearly 300 different lids across its yogurts with unique health and flavor info on each one, he explained—forcing its supplier to spend 40 hours a month just stopping the line to do changeovers. Recognizing consumers read front labels way more often, the company questioned if it really needed all that complexity.

  • It didn’t. Danone “dramatically” reduced the amount of lids it produces by creating more generic ones suitable for multiple flavors, Silveira said.

Seal the deal: Like many, the company also raised prices earlier this year—roughly 5% across its portfolio—and has found thus far that its brands have “resilience” to higher $$, Silveira said.

  • GlobalData managing director Neil Saunders noted to ModernRetail last week that since snacks and drinks are small, habitual indulgences, consumers are “willing to pay for the brands they enjoy.”

“Protecting our margin is the way that we protect our ability to invest behind our brands,” Silveira said.

Danone also likes to “play with promotions,” he added, working with retailers to reduce the frequency of its traditional 10-for-$10 single-serve yogurt deal or swapping it out for a four-for-$5 deal. (Its product mix of single- and multi-serve products helps with that flexibility.)

Zoom out: Overall, these are a lot of changes for consumers to take in, but so far not too much. “We are always very close to it to make sure that we don't overcorrect or overadjust the situation,” Silveira said. “It’s a balancing act, which makes this business super exciting.”

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