Danone Cuts Out the Cookies

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Defining exactly what a good-for-you product is--or what the market for these products might be--isn't a science. "You could make the market look as wide or as narrow as you want. The definitions are pretty loose," says Bob Goldin, executive vice president of Technomic, a food-industry research and consulting firm. "'Healthy' is very subjective," says Michelle Barry, senior vice president for consumer trends at the Hartman Group, a health-market consulting and research firm. "Consumers talk about it differently depending on who they are and what they believe." Danone is sensitive to this. The French believe prunes help digestion, so Activia comes in prune flavor in France; the Chinese associate cucumbers with regularity, so in China it's cucumber-flavored. But Danone also insists its health claims are based on hard science. The company has founded 16 "Danone Institutes" to study nutrition. It filed 30 health-related patents last year and maintains a "bio bank" with 3,000 strains of bacteria for research.

Since the Numico purchase, Danone's stock has fallen slightly, as investors digest the huge price, but Danone is convinced that trading cookies for clinical nutrition will make shareholders feel better in the long run. "At the end of the day, the new Danone is one of the best things we can imagine for the future," says Riboud. Replacing the unopened package of cookies on the table, Sacchi mentions that in Europe, Danone has just launched something called Essensis, a yogurt that he claims is good for your skin. What's next--yogurt that makes your hair grow? "Nobody would have bet that a yogurt made to help you go to the toilet more often would be a success," he says with a shrug. Just try doing that with a cookie.