Impact Business Models: Danone and Chobani

Updated: Apr 12


It's encouraging to see an increasing number of businesses start to integrate impact into their business models through an examination of their products, services or their operations' environmental effects. As we discussed in a previous blog, the most advanced companies are moving to embed impact throughout their entire business, setting measurable impact targets to move their businesses away from generating negative impact and toward increasing their positive impact.

Many companies are finding new ways to solve social problems by developing business models that have impact at their core. Today, let's take a closer look at some of these businesses that are integrating impact across their entire company.

Danone

In 2005, Emmanuel Faber, who was then Asia-Pacific president of Danone, arranged a lunch between the company's CEO Franck Riboud and Nobel laureate Muhammad Yunus, known worldwide as the father of microfinance. At the meal, Yunus invited Riboud to visit Bangladesh and build his first social business enterprise. Riboud agreed, and in 2006, Grameen and Danone announced the creation of Grameen Danone Foods Social Business Enterprise.

Bangladesh has one of the world's highest malnutrition rates; the new venture aimed to combat this problem by providing children with affordable and nutritious cups of yogurt, with Danone committing to reinvest any profit into other like-minded initiatives. For a major multinational, the venture was tiny—the yogurt factory in Bogra made up 1 percent of a typical Danone plant's size, and its production capacity was limited. But the project punched above its weight in terms of innovation. The product itself was innovative, too. Danone had to figure out how to pack vitamin A, iron, zinc and iodine into the yogurt without making it sour, keep it refrigerated during shipping and find ways to produce it as cheaply as possible to keep consumer prices below 10 cents.

A decade after its opening, the enterprise was selling 100,000 cups of yogurt every day and achieving its goal of combatting the malnutrition crisis in Bogra. In addition to helping children grow taller and receive proper nutrients, the operation employed nearly 500 local farmers as well as 250 women who sold the product door-to-door. The tiny factory gave the company a profitable lesson in manufacturing for the developing world, specifically in areas such as factory design and product development.

To invest in Grameen Danone and similar social enterprises, Danone created a group of mutual funds to support social innovation under its Danone Communities entity. In collaboration with Crédit Agricole, one of the largest French banks, the fund launched with $55.5 million from institutional investors and $23.8 million from Danone – and focused on investing in socially responsible businesses. By 2018, Danone Communities had supported 11 businesses in 15 countries to alleviate malnutrition, make drinking water safe and help break the cycle of poverty where they operated.

Today, Danone is among Forbes's largest 250 corporations globally and is rated as having the third-highest impact on public health and nutrition. Its aim to bring health through food is having a significant effect. The company continued to demonstrate its commitment to providing nutritious food products through its $12.5 billion acquisition of organic food producer WhiteWave in 2017, the company's largest purchase in a decade.

This acquisition made Danone the world's biggest producer of organic food, placing it in an excellent position to satisfy growing consumer demands for plant-based and dairy-free lifestyles, motivated by environmental, ethical and health concerns. Faber's mission to improve the impact Danone has on the world includes human and ecological health. The company also stated that their goal is to create a second “life” for all their plastic packaging and to move toward 100 percent recycling. Part of the plan is to also launch a 100 percent bio-sourced second-generation plastic.


All such impact transitions require the setting of clear, measurable goals. Danone has announced that it links its impact goals to the SDGs we have previously discussed: it has committed to be carbon neutral by 2050 and has set intermediate targets for 2030, building on a 50 percent reduction in emissions from its operations, packaging, and logistics between 2008 and 2016.


Following in Danone’s footsteps, a much younger American yogurt company, Chobani, is approaching the creation of positive impact

through its employment policies.


Chobani

At the end of 2012, two refugee sisters arrived in the US from the Middle East seeking a new life. Nisa and Amna's long and arduous journey began with threats of acid attacks and death and included being stowed in the windowless compartment of a truck without enough air to breathe.

Smugglers had separated the girls from their mother during their journey. One evening, they were left stranded in a town in Ukraine, where they knew no one. The sisters were on their own for four years and never saw their mother again, but finally, they were sent to Twin Falls in Idaho with the help of a humanitarian aid group.


The world's largest Greek yogurt factory had just opened in Twin Falls, and the sisters soon found jobs there. Nisa recalled that she asked a man to move out of her way to mop up some water on the floor when she was working one day. He asked her name and where she was from. She told him her story and began to cry. He hugged her and let her know she was in a safe place. That man was Hamdi Ulukaya, the CEO and founder of Chobani, the multi-billion-dollar yogurt company.

Since founding the company, Ulukaya, who insists he is not a businessman, has operated Chobani with several core principles he referred to as “the anti-CEO playbook” in a 2019 TED Talk. These principles include accountability, community, gratitude, being accountable to the consumer (as opposed to corporate boards) and responsibility. Hiring refugees is one-way Ulukaya cares for his community; by 2019, 30 percent of Chobani's employees were refugees and immigrants.

Ulukaya also founded a refugee advocacy foundation called the Tent Partnership for Refugees to help mobilize other employers. An immigrant himself, Ulukaya grew up in a shepherd's village in the Kurd Mountains in Turkey. As a young man in the mid-1990s, he decided to move to New York to study business; by 2005, he had bought a struggling yogurt plant in a small town called South Edmeston, 200 miles north of Manhattan.

Ulukaya had his sights set on bringing higher-quality yogurt to the US. Within two years, the company produced what is known as "Greek yogurt," a product that represented less than 1 percent of the American yogurt market at the time. Within five years, Chobani was the most popular Greek yogurt brand in the country and had revenues totaling $1 billion.

Many credited Chobani with the growth of America’s Greek yogurt segment, which by made up half of the US's total yogurt market. As the leader in the field, Chobani also set the example of being socially conscious from its start, paying above-market wages and supporting the communities in which it operates. In a 2019 sustainability report, the company stated that its purpose was to make universal wellness happen sooner and outlined its five sustainability focus areas: community, operations, people, responsibility, and supply chain.



In the same report, Chobani also created nine North Star goals that were tangible, trackable, and meaningful. The goals were designed to be bold, push the company and drive innovation. They included powering its manufacturing operations with 100 percent renewable energy, achieving water-neutral manufacturing operations, sending zero waste to landfill, running the firm's fleet on renewable fuel, sourcing sustainably, looking after the well-being of dairy workers, using sustainable packaging, achieving inclusion and diversity, and strengthening rural communities through business, philanthropy and development initiatives all within four years. With the company's many impact-focused initiatives and operational practices, Ulukaya seems intent on making Chobani a company that will improve the world. While Chobani’s positive impact initially started with employment, the sneaker company Adidas is also beginning to deliver impact by focusing on a different aspect of its business—the environmental impact of its products, which will be examined in my next blog post. In the meantime, if you want to learn more about impact business models and its role in the Impact Revolution, you can read my book, IMPACT: Reshaping Capitalism to Drive Real Change.

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