56 Business The Economist February 20th 2021
DanoneCulture wars
E
mmanuel faberused to be seen as the
spiritual son of Franck Riboud, honor-
ary chairman and former boss of Danone,
whose father Antoine co-founded the
French yogurt-maker. Mr Riboud hand-
picked Mr Faber as his successor and loyal-
ly backed his transformation of Danone in-
to France’s first entreprise à mission, a cor-
porate form with a defined social purpose.
In recent months the relationship has
soured. According to the French press, Mr
Riboud thinks Mr Faber is more interested
in saving the planet than saving his firm.
Danone’s share price fell by 27% in 2020
while those of rivals such as Nestlé and
Unilever made gains amid pandemic lar-
der-stocking. Its full-year results, due on
February 19th, are unlikely to inspire inves-
tors’ confidence.
Danone has been hit harder by covid-19
than rivals because of its large bottled-wa-
ter business. Its Evian, Badoit and Volvic
brands make money mainly from sales in
restaurants, bars and airports. But that is
not the only problem. In 2017 Danone over-
paid for WhiteWave, an American maker of
health-focused fare that it bought for
$12.5bn. The deal, which strained the bal-
ance-sheet but did not produce hoped-for
returns, is the main reason for Danone’s
current malaise, says Alan Erskine of Cred-
it Suisse, a bank. Bruno Monteyne of Bern-
stein, a broker, points to years of underin-
vestment in brands, which face stiff com-
petition from supermarkets’ private labels,
at a time when Danone’s dairy and baby-food businesses slow as birth rates fall and
people drink less milk.
Faced with these challenges, in October
Mr Faber announced an overhaul of the
business along more geographic lines. Per-
haps 2,000 jobs will be cut. It was the fifth
reorganisation on his seven-year watch.
Enough already, huffs Artisan Partners,
an American hedge fund which says it is
Danone’s third-biggest shareholder with a
3% stake. In a meeting with board mem-
bers on February 16th it demanded Mr Fab-
er’s exit, a stop to his latest restructuring,
and the sale of struggling brands such as
Mizone, a Chinese vitamin drink, and the
Vega range of plant-based foods.
Artisan is the latest Anglo-Saxon med-
dler to pile on the pressure. In November
Bluebell Capital Partners, a London-based
hedge fund that owns a stake in Danone,
demanded that the firm boot out Mr Faber
and split the role of chairman and ceo.
Causeway Capital Management, an Ameri-
can fund, has echoed Bluebell’s call.
Mr Faber’s entourage refers to the de-
mands, which appear to have the blessing
of 65-year-old Mr Riboud, as a “revolution
of gunslinger grandpas”. The activists may
still succeed, and not just because they are
not in fact that wizened. Helpfully, the
French state is staying out of the fray; its
spokesman said it had no comment. The
government has no stake in Danone, but in
2005 declared it an “industrial jewel” to be
defended against foreign buyers. Maybe
not when they have an ally on the inside. Anglo-Saxon activist investors want to whip Danone into shapeOnline shoppingSouth Korea’s baby
Amazon
W
ander around Seoul’s residential
neighbourhoods at dawn and you
will invariably encounter a Coupang deliv-
ery van. In the past few years South Korea’s
mini-Amazon has parked itself in a choice
spot amid a crowded e-commerce market
by steadily expanding the range of prod-
ucts it offers to deliver in time for break-
fast, so long as customers order before
midnight. Some items arrive the same day.
The strategy looked sensible before the co-
vid-19 pandemic. After 2020 it looks in-
spired. Coupang’s revenue nearly doubled
from $6.3bn in 2019 to $12bn last year. It
employs 50,000 people, twice as many as a
year ago, and controls a quarter of South
Korean e-commerce, up from 18% in 2019,
according to Digieco, a research firm.
The 11-year-old firm has yet to make
money—its cumulative $4.1bn loss so far
has been bankrolled by venture capital, no-
tably SoftBank’s $100bn Vision Fund,
which owns a 37% stake, according to esti-
mates by Bloomberg. Cashflow has im-
proved, says Kim Myoung-joo of Mirae As-
set Daewoo, an investment firm in Seoul.
But it needs more capital to grow.
Happily for Coupang, investors’ appe-
tite for startups seems insatiable, as the
boom in blank-cheque companies created
to merge with them shows (see Finance
section). So on February 12th it filed the pa-
perwork for an initial public offering (ipo)
on the New York Stock Exchange. It may go
public as soon as next month, at a market
capitalisation that could surpass $50bn.
Coupang is the latest in a generation of
young e-commerce stars nibbling at the
heels of Amazon and Alibaba, a Chinese ti-
tan. The incumbents are being challengedSEOUL
Coupang hopes to emulate other
second-generation e-commerce starsThey grow up so fast
Revenues, selected e-commerce firms, $bnSources: Bloomberg; company reports *Q4 2019 -Q3 2020403020100
2016 17 18 19 20*ShopifyMercadoLibreSeaPinduoduoCoupangMeituan