Danone: CMD on the Right Path but Not Ambitious Enough

Danone's June 20 press release, ahead of its Capital Markets Day, aligns with our view that the company's equity story revolves around two key steps: 1) restoring the performance of key brands, and 2) expanding into more advantageous categories and markets. With new management taking over a couple of years ago, we believe step 1 has largely been completed. Danone has made significant progress in improving performance in its core categories (EDP volume/mix turning positive in the last two quarters), fixing underperformers (Mizone), and focusing more on "winners" (up double digits in fiscal 2023 versus high single digits in fiscal 2021). However, step 2 is expected to be a longer-term journey rather than a short-term fix.