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9-410-121R E V : S E P T E M B E R 2 8 , 2 0 1 1________________________________________________________________________________________________________________Professor Christopher Marquis, Pooja Shah (MBA 2010), Amanda Tolleson (MBA 2010), and Research Associate Bobbi Thomason prepared thiscase. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data,or illustrations of effective or ineffective management.Copyright © 2010, 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not bedigitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.C H R I S T O P H E R M A R Q U I SP O O J A S H A HA M A N D A T O L L E S O NB O B B I T H O M A S O NThe Dannon Company: Marketing and CorporateSocial Responsibility (A)At the beginning . . . I set the challenge of putting industry to work for people, reconciling business andsociety at large. I am profoundly convinced that it is possible to be at once efficient and truly human. Inleading a business, we must use our hearts as well as our minds, remembering that while the earth’s sources ofenergy are limited, those of truly motivated people are not.1— Antoine Riboud, CEO of Danone (1972)At the end of 2009, The Dannon Company (Dannon) was at a strategic crossroads. Sixty-sevenyears after first entering the U.S. market, Dannon was poised to become the leader in America’sdomestic yogurt sector. As Michael Neuwirth, senior director of public relations, consideredstrategies that would take the company to the next level, he wondered how Dannon’s long-standing,deeply ingrained corporate social responsibility (CSR) efforts could play a role.Dannon was a U.S. subsidiary of Danone, one of the largest health-focused food companies in theworld. Danone’s global business focused on fresh dairy (e.g., Activia yogurt), bottled water (e.g.,Evian), medical nutrition, and baby nutrition. Dannon manufactured and marketed fresh dairyproducts in the U.S. and was the No. 2 player in the domestic yogurt market in 2008. Interestingly,Danone viewed the U.S. as an emerging market for yogurt, and therefore Dannon’s marketing effortshad focused on growing U.S. yogurt consumption and expanding the category, while also growingits brands.Dannon, following in the footsteps of Danone, had maintained a strong commitment to CSR. CSRwas not a stand-alone focus area, but integrated into the company’s overall mission of “bringinghealth through food to as many people as possible.” To date, the company’s CSR commitment andprograms had been very internally focused. For example, through its foundation, The DannonInstitute, the company was active in research and education on healthy eating, but few consumerswere aware of such activities.Yoplait, a portfolio brand of the U.S. food conglomerate General Mills and Dannon’s topcompetitor, was well known for its annual “Save Lids to Save Lives” breast cancer awarenesscampaign. With the strong connection between Dannon’s production of health and wellness foodsFor the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)2and its commitment to health and nutrition-based CSR activities, Neuwirth saw an opportunity tocommunicate these synergies to consumers and potentially enhance the company’s success. Hewondered, “Should Dannon start to proactively communicate to consumers about its CSR initiatives,and if so, what benefits and risks would Dannon face?”Before posing this question to the executive committee, Neuwirth decided to feel out theperspectives of various stakeholders within the organization, including members of the marketing,human resources, and corporate affairs departments. Some of the specific questions he planned toask these stakeholders were:x Should we communicate Dannon’s CSR activities?x What would be the best means to do so?x Should it be a corporate-level or brand-level campaign?x What would Danone think about this decision?x What would be the implications on Dannon’s current CSR initiatives?x What, if anything, would it require in terms of additional CSR programs?DanoneDanone traced its heritage to Barcelona, Spain, in 1919, when Isaac Carasso wanted to createyogurt with inherent health benefits. He introduced “Danone,”a an innovative yogurt product madewith pure lactic ferments he had obtained from Institut Pasteur in Paris, which helped treat intestinaldisorders and was initially prescribed by physicians. Ten years later his son, Daniel, foundedDanone in Paris, which leveraged its unique emphasis on health to differentiate itself from otheryogurt manufacturers. Upon his father’s death in 1939, Daniel Carasso became CEO and insubsequent years Danone embarked on a rapid expansion plan in Europe through mergers withGervais, a leading French fresh cheese business, in 1967, and with Boussois-Souchon-Neuvesel (BSN),a leading glass containers and beverages company, in 1973. In the 1980s and 1990s, the conglomerate,renamed BSN, became one of the world’s largest food manufacturers with a presence in 30 countries.In 1994, CEO Antoine Riboud began to lead BSN through a strategic reorientation, refocusing onthe company’s products with health and well-being benefits. As a first step, the company wasrenamed Danone, after the name of the company’s best-known international brand. Riboud and laterhis son, Franck (who became CEO in 1996), reorganized the company around four focus areas (dairy,bottled water, baby nutrition, and medical nutrition) and as a result divested several profitable,though noncore, businesses and acquired others.In 1997, Danone made its debut on the New York Stock Exchange (NYSE). “We are not listing onWall Street simply for the U.S. market,” explained Chairman Riboud, but “just as much to consolidateour position as leader,” particularly in dairy products and water.2 Danone was already quoted on theParis, Brussels, and Swiss Bourses and on the London Stock Exchange, but said it was now turning tothe NYSE in order to raise its international profile.3 In 2008, Danone posted net revenue of $21.2billion and employed 80,143 people worldwide. Its dairy and medical nutrition businesses rankedNo. 1 worldwide, with bottled water and baby nutrition holding No. 2 positions.a Danone, meaning “Little Daniel,” was named after Carasso’s son, Daniel.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-1213A Focus on Social Responsibility4To bring health through food to as many people as possible.— Danone Mission StatementDanone historically took a holistic approach to social responsibility and, as the mission statementindicated, social values were deeply embedded in the culture of the company and the business.Antoine Riboud communicated his vision of Danone’s dual commitment to economic performanceand social responsibility in 1972 when he stated, “Corporate responsibility does not end at the factorygate or at office doors. The jobs a business creates are central to the lives of employees, and theenergy and raw materials we consume change the shape of our planet.”According to senior leadership, social responsibility was as fundamental to Danone’s purpose asits economic performance. This was referred to as the “double project” (in French, le double projet),and stipulated an equal respect for the social impacts and financial results of business decisions.Employees, such as Tony Cicio, the vice president of human resources at Dannon, took pride in theauthenticity of Danone’s CSR activities, explaining that it’s “not done for the ‘wrong reasons,’ it’sreally done from the heart.” He described Danone’s approach as “humble” and “internal,” furtherexplaining that it “is not about ticking a box or proving something to the public; it’s engrained. Thereason the business developed in the first place. [It’s] not about looking good externally; it’s a part ofour culture.”Danone’s social responsibility focused on three areas: “Nutrition and Health,” “People,” and“Nature” (see Exhibit 1):x Nutrition and Health: At the center of the company’s CSR activities were the DanoneInstitutes, the first of which was established in 1991 in three countries in Europe and in 1997 inthe U.S. as a nonprofit organization with the mission “to develop and disseminate scientificknowledge on diet and nutrition to benefit public health” through a collaboration withacademics and scientists focused on nutrition research and health professionals. The institutesfocused their efforts around children’s nutrition education in ways that were pertinent to eachregion. For example, program areas in the United States included promoting children’snutrition, especially preschool nutrition education, and fostering the success of tomorrow’sleaders in the field of nutrition. As of 2010, there were 18 institutes worldwide (established bylocal Danone companies) sponsoring over 800 research projects and 60 continuing educationprograms for the general public, at a value of €16 million in financial support.5 For example, inthe United States, amidst the struggling economy of 2009, the Dannon Institute produced awebinar on “Maintaining School Wellness during Tight Budget Times,” while in Indonesia,the institute convened a meeting of experts on “Child Growth and MicronutrientDeficiencies.” The network was continuing to grow, with the most recent establishment in2008 of the Southern Cone Danone Institute, representing the countries of Argentina, Chile,and Uruguay.x People: Danone established both internal and external programs. Internally, the companyfocused on the development of employees through activities such as the “Danone Way,” amanagement tool designed to enable managers to assess performance along multipledimensions (e.g., quality, ethics, management, environment), and the integration of socialgoals in the remuneration of the company’s 1,500 directors and key managers. For example, atDannon US, 30% of employees’ variable compensation was tied to the company’s social andenvironmental performance. Externally, Danone supported its consumers, its suppliers, andthe local communities in which it operated. For consumers, the company not only createdFor the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)4nutritional education initiatives, but also updated the nutritional formulas of over 600products to be healthier. Suppliers were expected to maintain the social principles of Danone,in addition to ensuring product safety and promoting the economic development of localproducers. The company was also actively involved in local communities, committing anadditional €5–€6 million to sponsor local events and provide product donations andemergency aid relief. Additionally, in 2005, Danone’s Volvic brand collaborated withUNICEF to launch the “1 litre for 10 litres” initiative, which financed the digging of wells toincrease clean water access in Africa.x Nature: Danone took a firm stance on sustainability, with a target of achieving carbonneutrality on five of its brands by 2011. Accordingly, in 2001 it instituted the “Sensible Plants”program to reduce water consumption by 30%, energy consumption by 20%, and packagingweight by 10%, and increase waste recycling to 80%; by 2008, all targets, with the exception ofwater consumption (93% of target), had been achieved and surpassed. Further, between 2005and 2008, the company spent €90 million on environmental investments, including tools tomeasure carbon and water footprints. Danone also expected its suppliers to promoteenvironmentally friendly farming practices and planned on developing tools that integratesustainable development indicators into supplier evaluation and monitoring.As a testament to its commitment to social responsibility, Danone was selected for the Dow JonesSustainability Index from 1998 to 2008, and for the INNOVEST classification of the world’s top 100companies with high involvement in sustainable development from 2003 to 2008.Danone Enters the U.S.Danone originally entered the U.S. market in 1941, when Daniel Carasso immigrated to the UnitedStates in search of a safe haven during World War II. In 1942 Carasso founded Dannon MilkProducts, Inc., in New York, changing the name from Danone to Dannon to make it sound more“American.” At its inception, the company faced a major challenge, because the U.S. yogurt marketwas practically non-existent—most Americans had never even tried yogurt, let alone purchased it.As a result, Carasso was forced to think innovatively in order to garner interest among the skepticalAmerican consumer base. In 1947, Carasso achieved a major breakthrough with the introduction ofthe “Fruit on the Bottom” yogurt product; its perfect balance of tartness and sweetness suited theAmerican palate and made it an instant success. In 1955, Dannon proved innovative once again,introducing a low-fat yogurt that appealed to health enthusiasts.Although the decades after World War II brought various structural and ownership changes,including a period when the brand was owned by Beatrice Foods, in the 1980s Dannon once againbecame an “official” part of Danone. By then, the company had grown to 17 product categories(SKUs) and was poised for additional growth. The remainder of the 1980s and the 1990s werecharacterized as periods of innovation for Dannon. In 1988, the company capitalized on the newFDA approval of aspartame and launched “Dannon Light,” the company’s most successful productlaunch until that point. Moreover, it developed many novel products targeted at the children’s sectorand the desserts sector, including premium frozen yogurt. After Danone’s strategic reorientationaround health began in 1994, innovation at Dannon changed as product development becameanchored on health benefits.In addition to the Dannon business, Danone’s U.S. subsidiaries included Danone Waters ofAmerica (Evian bottled water) and Stonyfield (organic yogurt).For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-1215Dannon’s Relationship with DanoneDannon was a wholly owned subsidiary of Danone. At Danone, local decision making wasencouraged and trusted. Local executives were completely responsible for the profit and losses of thecountry-based business units (CBUs). While the scientific formulas for many products were created atthe global headquarters, specific taste profiles were typically adapted to a local environment. Dannonhad a fiduciary responsibility to its parent and was accountable for a set of deliverables and data forreporting purposes. For example, Dannon was obligated to meet annual targets for profitability,operating free cash flow, manufacturing safety, and environmental sustainability.Danone also worked to train its leaders and communicate the broader company values.Programs, such as Danone Way, a leadership training program, ensured cultural cohesion andoutlined the practices through which Danone operated. The company values were referred to withthe acronym HOPE: humanism, openness, proximity, and enthusiasm. “Humanism” embodied beingpeople oriented and was linked to the mission of health through food. “Openness” addressed thegoal of an open global culture. For example, CEOs and senior management regularly transferredamong Danone subsidiaries in different countries, which created exciting opportunities and growthplatforms for individuals and the firm as a whole. “Proximity,” with its Latin root for being close,emphasized the need for local subsidiaries to meet their financial commitments to the parentcompany. As Cicio said, “Our responsibility to our parent company is to live the values and deliverfinancial return.” Finally, “enthusiasm” was the result of the preceding three values that enabledexciting opportunities for individuals and the company.Gustavo Valle, the CEO of Dannon in 2009, exemplified the value of “openness.” He wasoriginally from Argentina, and before starting his position at Dannon US, he was the CEO of DanoneBrazil. However, he was not unique; of the 300 employees at the Dannon US headquarters, 50 wereborn outside the United States. Marketing Vice President Marc Jove, for instance, was born inBarcelona and before taking his current position, he was the marketing vice president at DanoneArgentina.The U.S. Yogurt IndustrySixty-seven years after Dannon introduced yogurt to the U.S., Danone still viewed the U.S. as anemerging market for yogurt. In 2007, U.S. yogurt consumption per capita was only 11.8 lbs, versus62.4 lbs in Switzerland and 42 lbs in France (see Exhibit 2). From 2003 to 2007, yogurt consumptiongrew 31% in the U.S., versus only 6% in Switzerland and a downturn of 3% in France.6 These twostatistics, combined with the much larger U.S. population, marked the United States as a highpotential growth market for Danone in the next 5 to 10 years. Growth had slowed in the past 2 years,and therefore Dannon continued to focus on growing the yogurt category and proving its relevanceto Americans.7Yogurt was not as core to the American diet as to the European diet. As of 2008, the total U.S.yogurt category was $3.7+ billion, growing at about 1.5% per year.b The main product categorieswere Staples/Quarts (38%), Light (27%), Proactive Health (13%), Kids (12%), Indulgent (6%), andDrinks (3%). Proactive health, the newest product segment first introduced in a test market byDannon’s DanActive in 2004, was defined as products with health benefits beyond basic nutrition,such as probiotics for improved intestinal transit and immune function.8 Recent growth in yogurtb The source of most of this sales data is IRI, a database that does not reflect some of the category’s largest retailers, mostnotably Walmart, where Dannon has a strong position and is growing faster than IRI-covered retailers.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)6consumption was driven by the Proactive Health, Light, and Quarts segments (see Exhibit 3). Coreyogurt consumers were 45+-year-old women. They were typically from a high- or medium-incomehousehold, although low-income household consumption was increasing. Demographics with highpotential for growth included 45+-year-old men, 0- to 11-year-old kids, and 25- to 54-year-oldwomen. While 85% of American households had yogurt and consumed it, they significantly trailedEuropean households in amount consumed. The average American consumption was around 13 lbsper capita on the coasts, decreasing to 9 lbs per capita in the middle of America. A core goal atDannon was to increase not only the number of Americans who consumed yogurt, but also howfrequently they consumed it.In 2008, Yoplait was the market leader with a 35.4% market share and Dannon was close onYoplait’s tail with 28.9% market share. The third largest market share, about 11%, belonged toprivate label brands. The other main segment of competitors consisted of small, niche companiescatering to a specific consumer, such as Fage (Greek) (see Exhibit 4). Another niche player focusedon organic yogurt, Stonyfield, was 85% owned by Danone. Yoplait was the market leader in the Lightand Staples segments, and these two segments represented 67% of their sales. Dannon was themarket leader in Proactive, and it represented 40% of sales (see Exhibit 5).Organizational StructureDannon valued collaborative decision making, and therefore major strategy and resourceallocation decisions were presented to the executive committee, which represented all the major partsof Dannon’s business (see Exhibit 6). Decisions were always strongly influenced by Danone’s globalstrategy and mission.The White Plains, New York, corporate headquarters was home to the executive committee, aswell as most corporate-wide departments such as marketing, finance, human resources (HR), andCSR. Nationwide, Dannon had 1,150 employees, most of whom worked at one of Dannon’s threeplants located in Ohio, Texas, and Utah (see Exhibit 7). The Ohio plant was the largest yogurtmanufacturing plant in the U.S. and among the largest in the world.ProductsDannon sold and produced 6 million cups of yogurt per day in almost 100 flavors, styles, andsizes.9 Dannon’s product portfolio covered most of the major categories: Staples/Quarts (Dannonbrand: Fruit on the Bottom, Fruit Blends), Light (Light & Fit), Proactive Health (Activia & DanActive),and Kids (Danimals & Dan-o-nino) (see Exhibit 8).Proactive Health had become a major area of growth and competitive differentiation for Dannonsince it launched Activia, the leading proactive health brand, in 2006. Activia was a yogurt thatcontained Bifidus regularis, a probiotic culture clinically proven to help regulate the digestive system.Activia’s ads featuring Jamie Lee Curtis were well known and were actually spoofed in a SaturdayNight Live skit in 2008. Within 1 year of launch, Activia reached $100 million in net sales—less than1% of new products ever achieve this milestone in their first year.10Marketing StrategyAs one of the top two yogurt producers in the U.S., Dannon was poised to benefit from growth inU.S. yogurt consumption, and therefore focused its marketing strategy on increasing categoryrelevance and per capita consumption. Starting in 2006, Dannon focused on providing products thatdelivered a high health benefit, and then communicating that benefit to make yogurt more relevant.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-1217Dannon allocated its marketing budget among the different brands, and did not advertise thecorporate Dannon brand. Dannon brands typically spent their marketing budgets on TV ads, in-storeshopper marketing tactics (e.g., coupons and aisle banners), and branded websites. In 2010, the mainpriority for Dannon was to help consumers understand what yogurt could do for them and how itimpacted everyday life. Once the yogurt category was further developed, the company expected toreevaluate its marketing priorities.The Dannon Company CSR11The responsibility of The Dannon Company, Inc., goes far beyond our business of producing wholesomeyogurt products. It is our privilege to be an active partner in providing families with the tools and informationthey need to live healthier lives.12— Gustavo Valle, President and CEODannon’s CSR activities fell under the Regulatory and Corporate Affairs Department, which alsocovered legislative, regulatory, and public relations activities. Gayle Binney, manager of DannonCorporate Responsibility and The Dannon Institute, was the only full-time employee dedicated toCSR activities. Neuwirth, as her manager, was also highly involved with CSR in addition to his PRresponsibilities. As with all Danone subsidiaries, Dannon was encouraged to develop projects thatcapitalized on Danone’s three key CSR themes: nutrition and health, nature, and people.Nutrition and HealthCreated in 1997, the U.S. Dannon Institute was an independent, nonprofit foundation dedicated topromoting excellence in the field of nutrition, and communicating the link between nutrition andgood health. The Institute pursued two main program areas in the U.S.: promoting children’snutrition, especially preschool nutrition education, and leadership development of promising andestablished nutrition researchers.The institute was unique in a variety of ways. First of all, both academic experts and Dannonexecutives sat on the institute’s board of directors. Unlike many company-organized foundations, theDannon CEO was not the president of the institute. As of March 2010, Virginia A. Stallings (M.D.;Director, Nutrition Center at The Children’s Hospital of Philadelphia) was the president of theDannon Institute. Dannon’s intention was to give leading academics authority, and thus maintain theintegrity of the institute. In January 2008, Dannon U.S. received Virgo Publishing’s Focus on theFuture Humanitarian Award for the institute’s contributions to nutrition education over 10 years.The institute was dedicated to spreading awareness and encouraging leadership in the realm ofhealth and nutrition. For example, the institute held a Nutrition Leadership Institute® that wasdesigned to equip outstanding nutrition doctoral graduates with a broad perspective and leadershipskills. Many of the program’s alumni took on important roles at academic institutions, governmentoffices, and industry. The institute also created a nutrition education curriculum, Celebrate HealthyEating, which was specifically designed for preschool children in day care settings. It providededucators with lesson plans about the food groups and classroom activities. The original fourprogram modules were distributed as a supplement to Scholastic’s Early Childhood Today magazine,with a distribution of 40,000 teachers, directors, and early-childhood coordinators and administrators.Additionally, in 2006, the federal government mandated the establishment of school wellness policiesfor public schools. The institute worked with District Administration magazine to publish HealthySteps Forward, a special edition publication and webinar, that provided school administrators withinformation about how to move district school wellness policies from implementation to assessment.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)8Dannon also made efforts to make healthy eating accessible to children in every socioeconomicgroup. In 2008, Dannon developed a quality, low-cost blended yogurt called NutriDay (laterrenamed Dannon $1.00). At a cost of $1.00 per four-pack, NutriDay provided schools with anaffordable, nutrient-rich food item for students. Additionally, starting in 2002, Dannon donatedexcess product to Feeding America, the nation’s leading domestic hunger-relief charity. In 2008alone, Dannon donated more than 2 million pounds of fresh dairy products. Dannon NextGeneration Nutrition Grants were established in 2006 with the mandate to help teach children andtheir families about healthy lifestyles to combat childhood obesity. Each year, Dannon contributed$30,000 to one nonprofit organization in each of the four communities with a Dannon plant or office,totaling $120,000 per year. The organizations receiving grant funding tracked and monitored howthe children enrolled in their programs changed their eating and physical activity behaviors. Forexample, the 2006 New York grant recipient, Hudson River HealthCare, reported that among thechildren participating in their program, there was a 154% increase in those who ate the USDArecommended number of fruit and vegetable servings per day, and an 81% increase in those whoparticipated in at least 30 minutes of physical activity per day.Dannon worked to keep its advertising in line with these ideals. In 2008, unlike many of itscompetitors, Dannon joined the Children’s Food and Beverage Advertising Initiative, pledging that100% of its advertising to children under age 12 would be for products that met key nutritionalguidelines reviewed and approved by the Council of Better Business Bureaus.People13Consistent with the Danone philosophy of engaging with the social environment, Dannonsupported local community organizations through donations and volunteer time. Some initiativeswere consistent across the company, such as “Children’s Day” in December, when historically all ofDannon’s locations provided volunteers at local charities to help children in need during the holidayseason. Various locations also had unique initiatives. For example, employees at Dannon’s FortWorth facility visited Cook Children’s Medical Center to decorate the doors to patient rooms andleave gifts in hospital beds; Dannon’s Utah Finance Department actively supported the AmericanHeart Association’s annual Heart Walk and Run, where 100% of employees participated, raising$5,135 and donating Dannon smoothies to the event.Dannon also worked to enrich the health and well-being of its employees through thedevelopment of a comprehensive work–life wellness program. This included free exercise programson site during lunch and after work, tuition assistance, financial assistance for adoption-relatedexpenses, and a scholarship program for the children of employees.Nature14Following the lead of Danone, some of Dannon’s CSR initiatives focused on the environment.Dannon’s cross-functional Green Obsession Team brought employees together to identify andpromote ways of reducing Dannon’s environmental footprint. From 2004 to 2009, Dannon reducedthe quantity of its primary packaging (on a per-ounce basis) by 15%, and plants and offices hadregular recycling programs.In 2008, Dannon hired a senior director of environmental sustainability, who led the GreenObsession Team and helped to ensure that green initiatives were incorporated into all of Dannon’sproducts and business strategies. In 2008, more than 85% of Dannon’s products were carried bytrucking companies participating in the U.S. Environmental Protection Agency’s Smartway TransportFor the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-1219partnership, a program aimed at reducing carbon dioxide emissions through improvements in truckdesign.The same year, Dannon conducted a Carbon Footprint Analysis to better understand thebreakdown of carbon generated during the life cycle of its products. Based on the results, Dannonprioritized nine key areas for improvement: packaging, manufacturing plant energy & water use,employee education & engagement, waste & losses in the entire life cycle, supply chain & logistics,external communication, office and workplace, raw materials, and retailer/consumer engagement.Discussions with Key Dannon LeadersOver the course of a few weeks, Neuwirth approached many of his colleagues to propose the ideaof communicating Dannon’s CSR efforts to its consumers and to understand their perspectives. Heappreciated that there were many different opinions on the subject and by no means was his mindmade up. He reflected back on the key points conveyed by each of his colleagues.Alessandro Arosio, Senior Director of MarketingNeuwirth’s conversation with Alessandro Arosio was informative; as a marketer with consumerpackaged goods companies for nearly 12 years, Arosio noted the tension between dedicatingresources to advance the brand and dedicating resources to promote the social mission. “We have aninternal debate on whether we should spend more money on the corporate level promoting socialprograms or whether we should put those resources towards fueling the stand-alone brands first.The reason why we haven’t committed is because we haven’t identified how we’re going to measurethe impact of the corporate program.”If Dannon did choose to increase its marketing efforts to promote this social mission, a consumercommunication strategy explaining Dannon’s CSR programs would be a natural “next step,” becauseit would demonstrate consistency in its marketing message and could translate to increasedconsumer confidence in Dannon. Through a combination of corporate-level and brand-leveladvertising campaigns, Dannon could potentially differentiate itself as a leading player thatpromoted the health of its consumers through its product line, as well as the progress of thecommunity in which it operated.On the flip side, Arosio felt there were several challenges with this strategy. First, given thatDannon was a company focused on measurability and impact, this initiative would be difficult tocalculate a return on investment (ROI) for since it provided mostly intangible benefits. There wouldbe limited short-term sales impact, if any, and as a result its success would be difficult to measure.Moreover, Dannon’s key business objective was to generate consumption of its products, and thepromotion of healthy habits through this initiative might not immediately impact consumption. ACSR communications strategy could increase consumer confidence in Dannon, but patience would berequired to assess its impact on business growth. Finally, Dannon’s competitors could takeadvantage of a potential halo effect if consumers were confused about which company had beenpromoting these CSR programs.There were also some specific considerations around the dynamics of the situation described byArosio that resonated with Neuwirth. Arosio explained:I would love to [communicate our CSR programs to consumers], but it would require achange in our fundamental commitments with [Danone] in Paris, including the budgets weFor the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)10agree to deliver. This drives our prioritization of investments, to ensure that we are able todeliver on our commitment. If we were to revisit these commitments, perhaps we couldreinvest in communication of CSR programs. Alternatively, if Dannon received a financialbenefit or tax incentive from the government to help promote public health and ultimatelylower healthcare costs through prevention and education about health, it would make itpossible for Dannon to pursue more of this strategy.Jon Pollock, Brand ManagerDuring his conversation with Jon Pollock, brand manager for Activia (who joined Dannon afterreceiving his MBA from Harvard Business School in 2007), Neuwirth gained some additionalinsights. Most illuminating was Pollock’s opinion on how Dannon should embark on thecommunication strategy if the company decided to pursue it. In Pollock’s words:We already advertise tremendous amounts on our individual sub-brands, with a focusaround health benefits, and Activia, for example, is becoming one of the most heavilyadvertised brands in the CPG arena. To that end, a bigger opportunity could be tocommunicate about what Dannon overall stands for and how it brings health, nutrition, andsocial well-being to the communities it is involved in, which aligns its business with its socialmission.In addition, Pollock believed there was an opportunity to use the global Danone brand. “Since theequity of the Dannon brand is relatively modest compared to Danone at a global level, there is a hugeopportunity to leverage the Danone brand’s halo to define how Dannon as a company brands itself inthe U.S.” Bolstering the Dannon brand could especially help the two proactive health brands, Activiaand DanActive, if Dannon came to stand for nutrition expertise as a result of communicating itsnutrition-focused CSR efforts, especially the Dannon/Danone Institutes. This could then providefurther credibility to the health benefits promised by Activia and DanActivePollock also expressed some concerns. First, like Arosio, he was concerned about themeasurability of the ROI and the opportunity cost of making the investment. He wondered, “WouldDannon be sacrificing short-term profitability for no guarantee of long-term value?” Pollock alsostruggled with the idea of opening Dannon up to additional scrutiny by publicizing its CSR efforts.Critics could potentially emerge and start analyzing all of Dannon’s activities and claim that thecompany could be doing even more. As such, Dannon could be forced into a defensive position andbe perceived as disingenuous by its consumers.Marc Jove, Senior Vice President of MarketingMarc Jove had been at Danone for 13 years, after working in marketing at Wrigley. Jove startedwith Danone in Barcelona. In one assignment, before joining Dannon in the U.S., he was the globaldirector of marketing for the Activia brand.Jove’s reaction was immediate and definitive. No, he would not recommend speaking withconsumers about Dannon’s CSR activities. The crux of his argument focused on this question: “Whywould someone buy a product because they like the company, even if the product is not relevant tothem?” As the head of the Marketing Department, Jove knew well that the main marketing challengefor Dannon was not getting consumers to want Dannon—rather, it was getting consumers to wantyogurt. Jove said:For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12111The U.S., strangely enough, is still an emerging market for yogurt. The yogurt category isnot yet as relevant to Americans as it is in other geographies of the world, and they don’t yetunderstand what yogurt is providing. Maybe, when consumers have decided to pursue theyogurt category, talking about our CSR would help them to decide among brands. But first,we need to educate Americans on the properties of yogurt and the health benefits.He believed that good marketing required making trade-offs and deciding on the best messages,because you couldn’t communicate too many messages at once. In Jove’s opinion, marketing dollarsshould first be spent building the category, and then increasing the consumption of Dannon’s specificproducts. Speaking to consumers about CSR before either of those landmarks was met would justmuddle the marketing message. As Jove said, “I cannot put the chariot in front of the horse. First isproduct. Then we can enrich it with community and social activities.”Jove had developed a corporate-level CSR-focused campaign when he was VP of marketing forDanone Argentina, just before he transferred to the U.S. in 2008. However, he saw that as acompletely different situation since the yogurt market in Argentina was very mature, with 30 lbs percapita consumption, and Danone was well positioned there as the leading brand. In that situation,marketing around a more emotional bond with the company made more sense to him, versus theneed to focus on rational benefits in the U.S. market.Once the yogurt industry convinced U.S. consumers of its relevance and had moved them to amuch higher consumption rate, then Jove would consider a CSR marketing message. However, hewould still avoid one-way, mass market communication channels. Instead, he would want to usetwo-way, targeted communication channels such as PR programs and interactive media initiatives.“We would need to open our ears to all the stakeholders and create relationships. The key would beto be completely honest and to have a credible CSR program to back up the marketing message.”While he did not want to use CSR as a tool to sell products, Jove did value the CSR commitmentof Danone, and that was part of what had kept him with the company for 13 years. “This is the typeof company where I can feel really good—I’m not only selling products with health attributes, butdoing so in a responsible way. There is a perfect match between my way of being and the company’sway of being.”Claudia Sargent, Director of MediaWhen Neuwirth approached Claudia Sargent about this idea, she immediately grinned and said,“I’ve gone down this road before.” Sargent spent most of her career on the advertising- and mediaagency side focusing on strategic media planning. A few years ago, she joined Dannon to manage allof its media planning and investment, and one of her first suggestions was to run a corporate imagecampaign that would feature the CSR activities. She noticed that Dannon’s marketing focused onselling individual brands and not Dannon as a company. “I wanted to develop more of a corporatecampaign—it would be an umbrella campaign that could feature all the different brands. And itwould have a health halo effect down to the individual brands. It’s not something you would run allyear-round—you would want to find specific times of year when you would either layer it overbrand campaigns, or it could be a bridge between different brand campaigns.”She still liked the idea of a corporate campaign focusing on Dannon’s health and nutrition CSRinitiatives, especially the Dannon Institute. It could create credibility for the Dannon brand and itskey message around the health benefits of yogurt. “This type of campaign would allow Dannon todevelop a more personal engagement with consumers by showing them that we care about the thingsthat they care about, such as health education for children and developing healthier products. If weFor the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)12advertise that, and have a tasty product as well, then it just makes an easier sell. . . . However, I don’tthink we have a competitive advantage in this, because Yoplait has been doing ‘Save Lids to SaveLives’ for years, and General Mills is a powerhouse in CSR marketing, at least in the U.S.” Sargentfelt that the differentiator would need to be Dannon’s focus on health and nutrition, and its tie to theproducts Dannon sells.Having been at Dannon a few years, Sargent saw it as a “nice to have,” rather than a “must have.”She said:When it comes down to budget allocation between this or a specific brand campaign, I’mnot sure this could make the cut. The main issue is reallocating funds away from a specificbrand campaign with a very functional message that we need to generate revenue for ourbusiness. We need to focus on brand growth related to the benefits of our core brands. Ourbenefits are very brand specific, and so need to be communicated on a brand-campaign basis.As a last thought, she mentioned the potential for a negative backlash if consumers felt Dannonwas just jumping on the CSR bandwagon. Although this would be undeserved with Dannon’s longhistory of CSR commitment, it could certainly happen with the current skepticism around “greenwashing” and ”pink-washing,” practices in which companies disingenuously emphasized social andenvironment benefits.Tony Cicio, Vice President of Human ResourcesAfter spending his career in finance, Tony Cicio moved into the position of vice president ofhuman resources at Dannon in 2008, seeking to challenge himself in a new role. As vice president ofHR, Cicio added a unique perspective about the intangible “people” aspects of the strategy.However, having spent his entire career in finance, and most recently as CFO of Dannon US, Ciciocould also speak to the feasibility of the strategy. For many of the reasons mentioned by the otherstakeholders, including the authentic alignment of Dannon’s mission statement with its socialinitiatives, Cicio was open to exploring the strategy, and with his financial lens, he was curious abouthow it connected to the company’s profits.Cicio saw this question as not simply a strategic choice, but a “moral dilemma.” He remindedNeuwirth that although the two pillars of Dannon’s purpose, economic and social, were separate,they were equally as strong and important. Cicio did not want to compromise either pillar. In hiswords, “Business interests are the business interests. And the social interests are the social interests.”Yet Cicio also felt that Dannon could benefit from an emotional connection that fueled consumerloyalty over time because “consumers are becoming wearier of corporate greed and thus are moresavvy in their purchasing decisions.” Cicio continued to say, however, that Dannon would have tobalance this benefit with a risk of misconstrued consumer perception that “Dannon is just anothercorporation trying to increase its commercial presence.” Accordingly, he believed that the strategyshould be launched on a small-scale, grassroots basis initially, with local community engagement.Cicio preferred to do it “for the right reasons.” Overadvertising could create a backlash and result inthe company losing credibility.Cicio saw an important role for CSR in the recruitment and retention of employees. In fact, whenpersonally recruiting employees, he started by telling them the mission statement: to bring healththrough food to as many people as possible. Cicio believed in the importance of employeesconnecting with the emotional purpose to “better the lives of people through the products that theyoffer” and thus fully understand how working at Dannon connects with their individual passions. Henoted, “with the newer generation of employees coming in, there is a need to have a social mission.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12113While some companies are now jumping on the bandwagon, this is not new to Dannon. A meaningfulpart of why they want to be part of the company, and why they stay, is that they have theopportunity to make a difference in the community.” He had observed that more people werechoosing companies with CSR programs, because it fit with what they wanted out of life.As the conversation with Neuwirth began to wind down, Cicio noted that while he took pride inthe CSR initiatives, he was well aware that Dannon was not a nonprofit, and did need to make profit.But he also struggled with the costs of CSR activities and the measurability of impact. He askedNeuwirth how sustainable the company’s CSR effort was without profit. Since CSR at Dannon wasnot alienated from economic aspects, and since he believed that indirectly there was an economicvalue, he admitted that he was open to ways in which CSR could provide an additional return oninvestment.Gayle Binney, Manager of Corporate Responsibility and The Dannon InstituteGayle Binney was the only employee at Dannon dedicated full time to CSR. She had joined thecompany in 2004, following a career in nonprofit management and at academic research institutions,such as New York Hospital-Cornell Medical Center and New York University Medical Center. Shehad witnessed the benefits of communicating the company’s CSR initiatives to employees, notingthat it provided “employees with a tangible way to be a part of the solution.” At the same time,however, she recognized the challenge of attempting broader reach, given that Dannon’s smallerscale in the U.S. might limit its ability to impact society at large and therefore might force it to focusits tactics and resources.According to Binney:While Dannon hasn’t made communicating its corporate social responsibility initiatives apriority, if you look at the communication dollars spent, it also hasn’t hidden it from the world;the company does communicate through the Dannon Cares section on its website and the 16-page Corporate Social Responsibility Overview that provides consumers with a perspective ofthe areas that Dannon has prioritized, and communicates Dannon’s commitment to nutritionand health.Additionally, financial analysts were aware of these efforts. Finally, Dannon focused on thecommunities in which it operated. For example, through the Dannon Next Generation NutritionGrants, Dannon initiated and supported nutrition education for children in the four communitieswhere it had its headquarters or factories.Binney was comfortable with the fact that Dannon had not been overt and promotional about itsCSR with the general public, because these programs were first and foremost an internal initiativeand not designed for public relations. She acknowledged that the company could have sought morecredit externally and that advertising CSR could definitely support the business. However, Binneystressed the complexity of that marketing message. In Binney’s opinion, any advertising wouldrequire articulating the connection between Dannon and Danone, then explaining what Danone hasdone and what Dannon has done. Although Binney felt it was an admirable story that would impresspeople, it would have to be told through a very well-thought-out campaign.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)14The DecisionThe last executive committee meeting of the year would be taking place tomorrow, and Neuwirthknew that this was his last opportunity to propose this CSR-consumer marketing strategy forinclusion in the 2010 strategic plan. After several conversations, he was more confused than ever aseach individual raised legitimate arguments for both sides.x Should he take a stand and propose this to the executive committee? If so, who wouldspearhead this strategy?x What type of communication strategy and media channels should he suggest?x Should he recommend a corporate-level or brand-level campaign?x Would Dannon have to make changes to its current CSR initiatives? If so, what potentialimplication would it have for future initiatives?x Would speaking about Dannon’s CSR efforts to consumers result in greater attention towardhealth and nutrition generally? In greater financial rewards for Dannon? Would this strategylead to greater internal investment in CSR activities?Ultimately, the matter boiled down to a single question in Neuwirth’s mind: “If we could growour business, while helping Americans choose better foods that led to better health, why wouldn’t wewant that?” Neuwirth took another spoonful of his delicious Activia vanilla yogurt as hecontemplated this decision.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12115Exhibit 1 The Three Focus Areas of Danone’s CSRSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)16Exhibit 2 Global per Capita Consumption of YogurtSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12117Exhibit 3 Retail per Capita Yogurt Consumption in the United StatesSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)18Exhibit 4 Market Shares of Leading Yogurt LabelsDollar Share of Category: Total U.S.Dollar ShareSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12119Exhibit 5 Dannon‘s Sales by Category as Compared to Competitors6Yoplait Owns Core, Kids and LightDannon Owns ProActive HealthKIDS 12%PROACTIVEHEALTH13%LIGHT 27%CORE 38%DRINKS 3%INDULGENT6%KIDS 11%PROACTIVEHEALTH40%LIGHT 27%CORE 19%INDULGENTDRINKS 2%1%Category$3.7 billion $1.1 billion $1.3 billionSource: IRI data YTD Ending July 26, 2009 for Pie Chart; Dollar Sales 52 WE July 26, 2009KIDS 19%PROACTIVEHEALTH 4%LIGHT 36%CORE 31%INDULGENT10%DRINKS 1%Source: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)20Exhibit 6 Dannon‘s Executive CommitteeSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12121Exhibit 7 Dannon Headquarters and Plants in the United StatesSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.410-121 The Dannon Company: Marketing and Corporate Social Responsibility (A)22Exhibit 8 Dannon Product PortfolioPortfolio of ProductsSource: Company document.For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.The Dannon Company: Marketing and Corporate Social Responsibility (A) 410-12123Endnotes1 Dannon’s “Corporate Social Responsibility: The Dual Project.”2 “France’s Danone Lists on New York Stock Exchange,” Les Echos, November 21, 1997, via Factiva, accessedFebruary 2010.3 “Danone to Make Its Debut on NYSE,” Agri-Industry Europe, November 21, 1997, via Factiva, accessedFebruary 2010.4 Group Danone, “Groupe Danone 2008 Sustainability Report,” http://www.econsense.de/sites/all/files/danone_rtdd_2008_en.pdf.5 http://www.danoneinstitute.org.6 “History of Danone—Dannon 2009.”7 “US Snapshot Updated Q3 2009 MN Clean,” IRI database analysis provided by The Dannon Company.8 Dannon Company, “You Asked about Probiotics,” brochure, http://www.dannon.com/pdf/Probiotic.pdf.9 http://www.dannon.com, accessed December 2009.10 “History of Danone–Dannon 2009.”11 Dannon Company, “Dannon Cares: 2008 Corporate Social Responsibility and Sustainable DevelopmentOverview,” http://www.dannon.com/pdf/2008CSR_complete%20locked.pdf.12 http://www.dannon.com, accessed December 2009.13 Dannon Company, “Dannon Cares,” 2008.14 Dannon Company, “Dannon Cares,” 2008/For the exclusive use of B. HARASANI, 2018.This document is authorized for use only by BAYAN HARASANI in Sustainabilty & CSR 3 taught by MARK KAY, Montclair State University from Sep 2018 to Mar 2019.
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