Nice find. Danone's original ownership position, acquired in 2001, was 40%. Could LWAY be next? With the founder dead and the other family members starting to sell shares, maybe they are in a mood to cash out.
stonyfield.com
Stonyfield Farm & Groupe Danone Partnership Summary
Contacts:
For Stonyfield Farm:
Cathleen Toomey
+ 603-437-4040 For Groupe
DANONE:
In the US: Matt Sherman / Joele Frank
+ 212-355-4449
In France: Laurent Lemaire
+33-1-44-352-073
Overview
Stonyfield Farm, Inc., the NH-based manufacturer of natural and organic yogurts and ice cream, enjoys a strategic partnership with Groupe Danone (Danone), the France-based consumer products company known for its sales of bottled water, dairy products and biscuits. Stonyfield is the largest organic yogurt producer in the world. Danone is a worldwide consumer products company with brands ranging from Dannon yogurt to Evian water to LU biscuits.
Introduction
Stonyfield Farm, Inc. began in 1983 with 7 cows and a great all natural yogurt recipe, as a project of a small family-run organic farming school. Today, it is the third largest yogurt brand in America. Over the last decade, Stonyfield has enjoyed the fastest compounded annual growth rate (24.3%) of any US yogurt brand. The company has built a national reputation for its leadership in organics, natural nutrition and corporate environmental responsibility and is the number one brand in the natural products segment.
The partnership with Groupe Danone, announced in October of 2001,has given Stonyfield management access to a vast range of know-how and talent in Danone’s world-wide team of manufacturing, purchasing, logistics, and other efficiency experts. In December, 2003, Danone purchased all non-employee owned shares of Stonyfield stock, enabling it to achieve majority ownership of the company,.and thus consolidating Stonyfield's financial results. But in a unique, if not unprecedented relationship, Gary Hirshberg, Chairman, President and CE-YO, continues to manage the company independently, and also retains majority board, control.
A Win/Win Arrangement
The Stonyfield Farm/Danone deal is unprecedented in the current climate of food industry consolidation. Over the last few years, numerous smaller, natural and organic products companies have been acquired by bigger conglomerates, fueling growth for mainstream companies with niche, fast-growing brands. Many of those examples, (Kraft/ Boca Burger, Nestle/Power Bar, Kellogg's/Kashi, Unilever/Ben & Jerry's), have resulted in changes of control and management of the acquired firm. This partnership, staged so as to enable both firms to "walk before they run" has been engineered not only to ensure Stonyfield's continued management autonomy, but also to ensure that its ambitious organic, environmental and social missions will be unimpeded as well.
Stonyfield Farm sought, in a strategic partner, a company that could lend cost-saving synergies, but who also had the foresight to allow Stonyfield Farm to continue growing its brand through mission driven initiatives. With Danone, Stonyfield Farm chose a worldwide leader in consumer products, a pioneer in probiotic and functional food research as well as the parent company of Dannon US, a $600 million company with significant brand, operations and distribution strengths.
Similarly, the partnership enables Danone to participate in the rapidly growing organic and natural dairy segment, which has enjoyed strong double-digit growth in an otherwise low growth overall yogurt category.
Compatible Missions: Environmental Responsibility
Stonyfield Farm has received numerous awards over the years for its waste reduction, energy efficiency, and environmental advocacy efforts. The company recycles most of its manufacturing solid waste; invests in green packaging research and carbon offsets to neutralize its manufacturing plant's contribution to global warming; uses its lids and packaging to promote environmental causes; donates 10% of its profits to environmental causes and has converted 90% of its products to organic certification.
Danone has, for many years, contributed to the development of environmental regulation in France and Europe. The company continually explores environmental monitoring programs and innovation in greener packaging, integrated farming and energy efficiency. Danone has also employed programs that have resulted in waste reduction and resource use, recycling and ISO certification in more than 50% of their sites worldwide. Danone supports integrated farming methods, and has carried out environmental audits worldwide.
Compatible Missions: Health and Nutrition
Both companies are leaders in product innovation for delivering products that offer health and nutritional benefits.
Stonyfield Farm is a leader in product innovation and functional yogurts in the U.S. The company's products contain six different live, active cultures, more than any other leading brand. Stonyfield Farm is the only U.S. yogurt that contains Lactobacillus reuteri, a probiotic that is clinically proven to boost immunity and enhance digestive health. Stonyfield Farm products also contain inulin, a natural dietary fiber and a prebiotic that has been clinically shown to increase calcium absorption up to 20%. Stonyfield Farm uses only milk from farmers who pledge not to use rBGH, a growth hormone used in U.S. dairy farming but banned in Europe.
Danone, an international leader in the research and development of functional foods, supports scientific research through the Danone Institute, and educational organization dedicated to furthering research on topics of health and nutrition ranging from probiotics to calcium. Some of the company's products that are targeted to specific nutritional needs include Actimel probiotic drink, calcium-enhanced water, energy-fortified biscuits and many others.
Key Elements of the Partnership
In 2001, Danone initially purchased approximately 40% of Stonyfield Farm stock from selling shareholders. In late 2003, after an initial two year trial, and the successful mutual realization of numerous business synergies, Danone purchased all remaining non-employee owned shares. Groupe Danone now owns approximately 85% of Stonyfield Farm, Inc. shares. The remaining 15% shares are owned by Hirshberg and other employees. As agreed, Hirshberg will remain Chairman, President and CE-YO, and will continue to elect three of the company’s five board seats.
Stonyfield did not receive a capital infusion from either the first or second phases of this partnership; Groupe Danone only purchased selling shareholders' stock.
Stonyfield now has two Danone appointees, including Danone’s world-wide head of Dairy on its five-member board. Gary Hirshberg has a long-term arrangement to continue as Chairman, President and CE-YO.
There have been and will be no changes to Stonyfield Farm employees, facility and operations resulting from this partnership
Stonyfield's sales, brand and marketing strategies remain independent from Danone and have been unaltered by the partnership.
Milk continues to be supplied by New England and Midwest dairy farmers through the St. Albans and CROPP cooperatives, with Stonyfield continuing its focus on growing the number of organic family farms across the U.S.
Stonyfield's "Profits for the Planet" program, in which 10% of prior year's profits are donated to environmental causes continues as a key example of Stonyfield's environmental mission.
Summary
In conceiving this partnership, Stonyfield Farm and Danone carefully crafted an arrangement that balances both companies' goals of generating strong financial results and returns, with their strong commitments to environmental responsibility. Stonyfield achieved a favorable liquidity exit for its investors and a strong growth partner for the future. Danone entered the US natural and organic products segment by partnering with one of its strongest, most successful and best-known firms.
From Stonyfield's perspective, business and industry must provide solutions to the pressing social and environmental issues of the day. If socially and environmentally responsible companies are to thrive and be a legitimate model for American business, such firms cannot remain in niche positions and must forge a path into mainstream markets. The Stonyfield/Danone partnership is an excellent model for enabling emerging values-driven firms to gain in strength and stature, while remaining loyal to the growing base of consumers who seek organic and natural products.
In December, 2003, at the conclusion of the second phase of this partnership, Stonyfield’s Chairman, President and CE-YO Gary Hirshberg made the following public statement: “ I am delighted to announce the successful completion of the first phase of our partnership,” noted Hirshberg. “ This has been a win-win-win-win for Stonyfield’s customers, shareholders, employees, and for Groupe Danone. Our customers can be assured that the folks who have consistently delivered the highest quality organic and natural yogurts for 21 years will continue promoting healthy food, healthy people and a healthy planet well into the future. Our shareholders have been well rewarded for their support over these past decades and can rest assured that we will continue our health and environmental missions with greater enthusiasm than ever. Our employees can be secure that Groupe Danone is committed to our independent and autonomous management and to continue as the family company they have helped to grow. And Groupe Danone is enjoying a strong partner with an incredibly bright future.” |
