Food and beverage firm Danone is planning to lay off between 1,500 and 2,000 workers who staff its local and global headquarters as part of a move to cut its overhead costs and save €1 billion by 2023, the company announced at a 2020 investor update event on Monday.
The France-based firm is looking to make reductions in its costs in response to increased financial pressures that emerged during the COVID-19 outbreak.
“We are confronted with factors such as the closure of out-of-home channels affecting everywhere, our Water business, with the reduction of SKU ranges by our retail partners, or the announced dip in birth number dynamics, but also with the elevated cost of operating with sanitary measures and the cost of securing procurement and physical flaws of our products,” Danone CEO and chairman Emmanuel Faber said in a statement.
As part of the effort, Danone will carry out its “Local First” plan, which involves shifting the organization of its local business units to single local business units. Zone presidents will represent the units in the firm’s executive committee. The company also plans to relocate its global headquarter in Paris to be closer to its French business headquarters and consolidate some of its local headquarters.
“This simplification and evolution in the role of our common functions will translate in reductions of around 1,500 to 2,000 positions in local and global headquarters, with up to 25% of current job positions for our global headquarters,” said Faber.
Beyond the job cuts, Danone expects to save about €300 million from reduced cost of goods and €700 million from general and administrative costs.