French food group Danone to cut 2,000 jobs due to pandemic

French food group Danone announced on Monday it would slash up to 2,000 posts to cope with the downturn caused by the coronavirus pandemic.

The mass layoff is part of Danone’s “local-first” plan, which aims to deliver cost savings of 1 billion euros (1.19 billion U.S. dollars) by 2023 –including 300 million euros from reduced cost of goods and 700 million euros related to general and administrative costs, it said in a press release.

Danone will study relocating its global headquarters in Paris closer to French business headquarters, a move that will lead to “a reduction of around 1,500 to 2,000 positions in local and global headquarters, with up to 25 percent of current job positions for our global headquarters.”

“The most prominent paradigm accelerated by the pandemic is undoubtedly the trend toward local,” said Emmanuel Faber, Danone Chairman and CEO.

“It is a systemic evolution whereby the diversity of dietary habits rooted in their local cultures is now considered as a key security and resilience factor for global food systems,” Faber said. “It is also a major political trend with the strong emergence of national food sovereignty narratives in many countries.”

With the restructuring plan, Danone expects a return to “profitable growth” between 3 percent and 5 in the second half of 2021, and a return to a “pre-COVID margin” of greater than 15 percent from 2022, he added.

Over the first nine months of this year, Danone’s turnover fell by 5.4 percent year-on-year to 18 billion euros. The sales of bottled water — the hardest hit because of the closure of restaurants and bars as part of anti-coronavirus measures — dropped by 20.5 percent, according to the group’s Q3 report. (1 euro = 1.19 U.S. dollar)

Danone in Hungary: Production ceased at the end of June 2015. The shutdown of the Budapest plant affected 139 employees. From this time Danone products manufactured abroad are available in Hungary.