Through a combination of stealthy product reformulation to significantly cut sugar and fat, and the launch of several healthy line extensions to take the place of less nutritious options that were phased out, Dannon improved the nutrient density of its overall portfolio 4.8% by September 2015, which roughly marks the halfway point of its three-year deadline to improve its product portfolio’s nutrient density 10%.
In this same period, the company exceeded its goal to reduce sugar in at least 70% of its products to be less than 23 grams of total sugar per 6 ounces, and neared its goal to meet this sugar standard in 100% of children’s products by reaching 93% of products for children.
The company also exceeded its goal to reduce fat in products across its portfolio. Originally shooting for 75% of its products to meet FDA’s definition of fat-free or low-fat, as of September 2015 83% of the company’s goals met this target.
Fast-forward from September to the present the company has about one month to complete its goal of improving overall nutrient density, but based on its progress since the fall the company’s President and CEO Mariano Lozano told FoodNavigator-USA that Dannon not only is “very close to achieving the commitment,” but that he has “a strong belief” that the company will exceed its goal come June.
The path to success (and growth)
Lozano acknowledged that the success did not come easily, and indeed when the pledge was made some people in the company said that it was “totally crazy” because it wasn’t clear how Dannon would achieve the thresholds.
“I think that was a confirmation that we were having a very ambitious objective and we were starting to feel comfortable not knowing all the answers,” he said, adding: “And in that environment, we said, OK, we need to start to reformulate our current portfolio and then we need to think different about our innovation.”
And Dannon did just that with its popular children’s yogurt brand Danimals, which Lozano said the company was able to reduce the total sugar content by 25% by using a different combination of cultures and fermentation that produced a less tart yogurt. This resulted in less of a need for sweetener to balance the taste.
The company made the change quietly at first – refraining from announcements about the reformulation – for fear that consumers would assume the product would not taste as good and would not even try it. After giving consumers a chance to try the product and seeing sales go up, rather than down, Dannon announced the change publically – showing that healthier food tastes just as good or better than less nutritious versions.
As an example of success on the innovation side, Lozano pointed to the launch last year of Oikos Triple Zero Greek Nonfat yogurt, which has zero fat, zero artificial sweeteners and zero added sugar on top of 15 grams of protein.
“It was a powerful machine with a very good taste,” Lozano said
At the same time as the launch, he noted, the Oikos brand leveraged its sponsorship with the National Football League and featured Carolina Panthers’ quarterback Cam Newton as a spokesman for the brand.
The combination resulted in “the biggest innovation for last year for the category,” and helped propel the company to meet its commitment to PHA.
Reflecting on the changes’ impact on Dannon’s business overall, Lozano said, “We were happily surprised by the level of engagement and traction we got inside the company around this type of commitment, because, obviously, we are a results driven company and we like to hit our sales targets.”
But, he added the success was made sweeter knowing that “when you are able to hit your economy targets, but at the same time … the more you sell and the more the category grows [the more] we can have a true impact on the society.”
And that is really what the company’s commitment to PHA was all about.
“We are in front of a huge challenge that … the current kids’ generation most probably will have a shorter lifespan than the parents. And that is the first time in American history – 400 years. So this is huge and that needs to be tackled by a variety of players in the private sector, the public sector, the policy makers, and NGOs,” Lozano said.
He added, “So I think we have clarity on our role, we have a heightened sense of pride inside the company, and I think the strong support of PHA and the strong drive – even from the First Lady’s office – was helping as well to engage a proper amount of people. And it think this momentum that has been great in the last four years with PHA is here to stay because who could be against having a healthier kids’ generation.”
Life after PHA
As Dannon wraps up its commitment to PHA next month, it already is moving forward with its next ambitious goal.
It announced last month that it plans to improve the naturality and transparency of its products. This will include another “bold pledge” to evolve three of Dannon’s flagship products – Dannon, Oikos and Dannimals – to be more natural.
“Natural for us means fewer ingredients that are closer to nature, cleaner labels, not synthetic and non-GMO. And then looking not one or two but 10 steps farther than that, also we are going to commit that the milk that we are going to use for those three flagship brands are going to come from cows that are non-GMO fed,” by the end of 2018, Lozano said.
Just like its commitment to PHA, these new goals will be challenging and the company doesn’t yet know how to achieve them, but it is confident it will and that the changes will be a business success.