Business & Leadership

Growing Pains for Michel et Augustin

Danone taking its stake in premium snack-food producer Michel et Augustin to 95% came as no surprise, as the French multi-national had signaled its intention to do so as far back as 2016. However, there is less buzz around Michel et Augustin these days than a few years ago. High competition from rival ‘posh’ food companies, difficulty cracking markets in the English-speaking world, the brand has also seen the involvement of its iconic duo of founders diminish. Can the company take the next step or has its success peaked?

Danone taking its stake in premium snack-food producer Michel et Augustin to 95% came as no surprise, as the French multi-national had signaled its intention to do so as far back as 2016. However, there is less buzz around Michel et Augustin these days than a few years ago. High competition from rival ‘posh’ food companies, difficulty cracking markets in the English-speaking world, the brand has also seen the involvement of its iconic duo of founders diminish. Can the company take the next step or has its success peaked?


“We are in a very complicated market. Danone has given us a certain measure of independence. These days the big multinationals are conscious of the need to let the bright young companies in their portfolios steer their own development,” stated Augustin Paluel-Marmont, who co-founded the company in 2004 alongside Michel de Rovira, upon the announcement of Danone acquiring the 95% stake for a sum of between $85 and $110 million. Sober and to the point, this statement nonetheless reveals a couple of key points, namely the difficult climate in the food industry right now and the need for promising young companies to be taken under the wing of established multinationals in order to grow.

 

Phenomenal marketing success

 

The phenomenal success of Michel et Augustin – France’s answer to Ben & Jerry’s – is primarily down to clever marketing. Consumers appreciate the way the company uses humor to talk up the quality of its products. This approach to marketing came from the two founders themselves, former high-school classmates in Paris, who were prepared to run through the city’s metro naked but for the black splotches of their cow costumes, and who orchestrated a guerrilla marketing operation at the headquarters of Starbucks in order to get a meeting with its president Howard Schultz.

The names and packaging of their products also stand out, from a smoothie whose name translates as ‘the drinkable cow’ to ‘good and tasty biscuits’ these self-proclaimed ‘taste-invaders’ have brought a wave of freshness to the supermarket aisle.

 

High-end products

 

Yet, the agri-food sector is highly mature, which makes the emergence of new product lines difficult. Michel et Augustin went high-end with ‘posh’ snacks that are not in within everyone’s budget. The drinks and snacks are made in France with quality ingredients. The biscuits, for example, are made in Toulouse, using real butter. In stores, a packet of cookies costs around six dollars, over twice the price of most rival brands. It is the snack part of its product line that has, perhaps, put the brakes on growth, while its dairy products, although also pricey, continue to sell well. Sales stagnated at around $55 million in 2018 whereas five years ago the company predicted it would by earning over $100 million a year by now.

 

International resistance

 

Now an established presence in France, Switzerland and Belgium, which combined account for 85% of turnover, Michel et Augustin has struggled to make an impact beyond their home turf of French-speaking Europe. The premium snack market is already well developed in the UK, where companies such as Innocent and Tyrells already dominate the market. Michel et Augustin has barely made any impact in the US (a selection of its drinks were briefly on sale at Starbucks coffeeshops in 2016, and had a limited distribution run at Whole Foods and with Delta Airlines.

With Danone now calling the shots, a new pair of directors have been brought in to try and crack the US market: François Roche Bayard (ex of Andros and Lu) as managing director and former Coca-Cola exec. Evan Holod as head of the the American office. And what of the founders? They have taken a back seat in the running of the company, even if they are sticking around for the time being. Can Danone improve on these ‘taste invaders’ recipe for success? It’s far from a sure bet.                     

 

Firmin Sylla  

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