Danone is a food and beverage company that operates in three divisions: Fresh Dairy Products, Packaged Waters, and Baby Food and Medical Nutrition.
Impacts and Opportunities for Food Products Companies
Ecological Impact of Agriculture
According to World Wide Fund for Nature’s One Planet Business report, Food accounts for 23% of the global ecological footprint. Within the Food categorization, the Food, Products, Beverages, and Tobacco industry sector accounts for almost 11% of the global ecological footprint while Agriculture, Hunting, Forestry, and Fishing account for 12%.
Danone has adopted the United Nations Food and Agriculture Organization’s definition of sustainable diet, defined as “those diets with low environmental impacts which contribute to food and nutrition security and to healthy life for present and future generations.” Moreover, in 2015, Danone released group-wide Sustainable Agriculture Principles which are based on developing agricultural production models that simultaneously meet the demand for food and protect the natural cycles linked to soil, water, climate and biodiversity.
Healthy Food Products
According to the World Health Organization, by 2015, it is estimated that over 1.5 billion people will be overweight . If recent trends continue, projections forecast that by 2030, 2.16 billion people will be overweight and 1.12 billion will be considered obese .
In 2014, 30% of Danone’s products sold were improved nutritionally over the previous three years for reduced fat, sugar, salt and/or addition of desirable nutrients such as vitamins and minerals.
Packaging plays an important role in the environmental impact of food and beverage products. Packaging that contains recyclable or post-consumer recycled content, or minimizes the use of materials, gives companies the opportunity to reduce their environmental footprint by reducing their waste output. Companies that introduce eco-friendly packaging in their products will be at an advantage in mitigating their environmental impact.
Danone has a wide range of packaging goals. More than a quarter of Danone’s packaging is produced from recycled materials. Within the company’s Waters division the company intends to achieve a rate of 25% recycled PET (Polyethylene terephthalate) by 2020; in 2014 the average rate of recycled PET incorporation in the Waters division was 8%.
Areas for Improvement
Group-wide commitment on Genetically Modified Ingredients
The use of ingredients from genetically modified organisms (GMOs) in food is not supported by consumers in many countries. Some consumers hold concerns over the risks that GMOs pose to human and environmental health. Currently 64 countries around the world require labeling of GM foods and the demand for increased transparency is growing. Danone does not use ingredients from genetically modified plants in its products, except in countries like the U.S., where “public concern on the subject remains limited and large-scale agricultural production of GM crops makes it difficult to obtain supplies of non-GMO products.” We would like Danone to take a stronger leadership position by applying a group-wide exclusion on the use of genetically modified ingredients.
 WWF and SustainAbility. One Planet Business: Creating Value Within Planetary Limits. 2007 First Edition.
 World Health Organization. (2014) Part Two. The Urgent need for action. Retrieved from http://www.who.int/chp/chronic_disease_report/part2_ch1/en/index16.html
 Kelly T, Yang W, Chen CS, Reynolds K., HE J. (2008). Global burden of obesity in 2005 and projections to 2030. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/18607383
Industry: Consumer Staples
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 9/29/15 and may not reflect current opinions or subsequent events.