Danone sees the future of business models in Africa

Danone considers Africa an essential market. In an article published in the French economic daily “La Tribune Afrique”, the group’s former General Manager for Africa, Pierre-André Terisse, considers that Africa is ripe to experience the “business models of tomorrow”.

Danone has a long-standing historical relationship with Africa. The multinational company has been present on the African continent since 1953 starting in Morocco, followed by Algeria, Egypt and Tunisia. Morocco still represents one of Danone‘s strongholds on the African continent. In recent years, the group increased its footprint in the west of the continent, with the acquisition of Fan Milk as well as in East Africa with the acquisition of the Kenyan company Brookside Dairy. Danone also has good coverage of Southern Africa with its subsidiary in South Africa. In recent years, most of the high-growth areas are located in sub-Saharan Africa, where the demographic potential is immense.

According to data from 2020 collected by the consulting cabinet AlphaValue, the group employs 9,000 people in 40 countries in Africa as a producer or retailer. Sales in Africa account for around 7% of the company’s global revenue with the view that Africa could contribute more to the group’s global numbers over the years.

Danone is placing particular emphasis on dairy products, including fresh milk, UHT milk, fermented milk, cheeses, yogurts, milk powder, etc. The multinational is also looking at the development of cereals for infants in Africa.

Back in 2017, Danone former General Manager for Africa, Pierre-André Terisse, looked at the continent as “[the place where] we’re going to create the business models of tomorrow”. Terisse expressed in an interview with La Tribune Afrique its big ambitions for Africa, “where everything remains to be done”. The annual growth rate of the group’s African activities should approach 10%, with an Africanisation of its management structures.

Africa, a true laboratory for the growth of the future

The multinational sees its presence in Africa as a field for local innovation by taking advantage of the continent’s specificities. The implemented innovations in Africa could eventually be adapted to other markets around the world.

Terisse gave as an example the fact that Danone is operating in Africa on a multi-category model, contrary to Danone’s general operations around the world which concentrate around four very distinct categories (fresh dairy products, water, baby nutrition and medical nutrition). The Moroccan branch handles all the categories plus cereals while the Egyptian branch also produces cheese, milk, cereals among others.

“These are not the traditional management models that Danone uses elsewhere, but we are gradually integrating them at group level. The idea is that, little by little, the size of Africa within Danone will increase, particularly the number of African managers, local innovations and regional organisations that will grow and have an impact on the group beyond sales,” told the former GM Africa to the newspaper.

Terisse explained then that western-style development models showed their limit in protecting the environment while not being very inclusive and generating mass unemployment. “This is the observation that prompted us, ten years ago, to set up platforms aimed at creating businesses with a strong societal impact. In other words, businesses that aim first and foremost to have an impact on consumer health, that are inclusive because they rely on small farmers, that promote recycling and develop co-distribution and, ultimately, that create jobs in communities and redistribute the value created locally”, described Pierre-André Terisse.

“Africa is more than just a laboratory. It is on this continent that we are going to create some of the business models of tomorrow, where we are going to put them into practice on a large scale. We have already started to invent them, now we need to replicate them and grow them in a way that makes sense for consumers, breeders and farmers… and therefore ultimately for all the people who gravitate around us and contribute to our value chain,” he stressed.

Partnerships are needed to achieve the group’s ambitions and consequently limit imports. “One of the challenges for Danone in the short/medium term will be to create partnerships in Africa that include both private players in the broad sense and governments, on a case-by-case basis”, analysed Terisse.

In the future, Danone aims to build on the success of producing local milk in Africa. “There, our milk remains essentially local, notably through collection from 120,000 farmers in Morocco or 150,000 farmers in Kenya, and also from large farms,” explained the former General Manager for Africa.

Danone will be present at SIAL Paris 2024.

Top image credit: Eiliv Aceron for Unsplash

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