Martin Bidegaray
11/24/2020 6:00 AM
Clarín.com
Economy
Updated 11/24/2020 6:00 AM
French company Danone, a leader in yoghurt, cream cheese and mineral waters, is
reviewing whether it will continue in Argentina.
The evaluation will last until mid-2021. At that time, the parent company will decide whether the local operation continues, if partners are sought to improve it or the process to divest its assets begins.
“
We have been in Argentina for 25 years, so we know it is a roller coaster ride
,” Emmanuel Faber, Danone's president and CEO, explained to investors when he spoke of a potential exit from the country.
His words led Danone suppliers and customers (such as supermarkets or retailers) to find out with local executives what the future of the company will be.
The answer they found is that everything is under study, but the conclusion will be in the first half of 2021.
The
fall in sales volumes, and the tie of the "maximum prices"
are mentioned by local executives, as obstacles.
This stems from conversations that Danone had with different partners, according to
Clarín.
“We are reorganizing and reshaping the way we work in Argentina, with the aim of coming out of this crisis stronger than we were before.
Today I don't think we're going to leave Argentina, leaving would be the last decision (....), according to Faber.
“The local team did not wait to carry out a radical restructuring.
But the point is that in the Argentine macroeconomy we see enough
traction in the next three years,
two years, 18 months that creates the connection between our Argentine business and what I think is necessary in this world of Covid-19, which is to focus. our efforts, "he said.
But Danone hopes the "efforts" will lead to some profitability path.
“The objective is the most important thing and they have to be opportunities for sustained growth.
That is why
I am not saying that Argentina is going to be sold.
But we are going to review several options.
We have partners there.
What we have to make sure soon is to come to a conclusion about (what to do) with that particular asset ”, said the French CEO.
Danone started a
partnership with Arcor in Bagley,
for its cookie business.
Later, Bagley and Arcor also got into the share package of
Mastellone
, the maker of La Serenísima.
Danone has a commercial relationship with Mastellone since the country started and several times it assisted it with an injection of dollars, in exchange for staying with different businesses (such as desserts) or its distribution system.
Danone's balance sheets in Argentina have been different from those in the rest of the world since 2014. From that moment, high inflation parameters led the parent company to treat the accounting of its Argentine revenues in a different way from the rest of its international operations.
This situation came out in 2017, when it seemed that the local subsidiary was back to normal, and there were even growth numbers.
But, in 2018, the balance
was
again
modified by high inflation and Argentina adjusted again,
finding within the countries with high inflation, Other subsidiaries of multinationals also adopted this accounting scheme.
With a drop in sales from 2018 to 2020, Danone would also have
been overstaffed,
according to estimates by company executives.
Its 6000 workers were designed in a sales growth scheme.
Now, they understand that they could run on 1,000 less.
Danone was always supervised by a French executive.
And local successes have always been the platform for Argentine executives to emigrate to larger and more successful operations.
At this stage, everything is local and those who command the operation are Argentine.
Like all mass consumer companies, Danone turns to the Secretary of Internal Trade to request increases.
To the Government, company executives told them that there was a drop in the consumption of dairy products and mineral waters (they spoke of
up to 40%
), which they need to balance with higher prices for their products, as they argued.
Danone's other business is nutrition, with specific foods, but its bulk is dairy and water.
Yogurtísimo is its star brand in the first category, while Casamcrem is its tank in cream cheeses.
In mineral waters, they own Villavicencio and Villa del Sur.
