In early 2021, investment management firm Artisan Partners sent an open letter to an incoming member of Danone's board, saying it had built a stake of more than 3% in the French food giant.
"On almost every measure, Danone's performance has lagged," Artisan said, and called for change.
About a month later, Danone's then-CEO and chairman, Emmanuel Faber, was ousted and its board overhauled in a high-profile victory for shareholder activism.
Today, Artisan, which manages about $146 billion, is Danone's top shareholder with a 7% stake, according to LSEG data.
David Samra of Artisan's International Value team, which seeks investment opportunities in under-valued businesses, said more changes may be coming.
"I wouldn't be surprised if there's more turnover at the very senior levels," Samra told Reuters, noting the "very mediocre" performance of Danone shares. "If somebody is not performing, we will get new people."
Danone, the maker of Activia yogurt and Evian bottled water, did not respond to a request for comment.
The company's stock has declined around 13% in the past two years.
Unilever and other large rivals have also underperformed the EURO STOXX Consumer Products and Services EUR Price index over the past year.
Shareholders
Reuters spoke to four shareholders that have launched activist campaigns who said that some big consumer goods companies are ripe for executive changes after failing to impress. The sources declined to name specific companies, in some cases because they work with them.
Data shared exclusively with Reuters by consultancy Alvarez & Marsal also showed that, in the first seven months of the year, the consumer goods industry was the most targeted by activist investors.
Some 236 campaigns were launched globally between January and July, the most the industry has seen in at least half a decade, Alvarez & Marsal said.
That represented a fifth of all activist pushes across all sectors during that period.
Alvarez & Marsal did not identify the targets of the campaigns nor say what they were about.
Large Companies
Many large consumer goods companies generally hold low levels of debt and are cash generative, said André Medeiros, managing director and Alvarez & Marsal's EMEA consumer and retail leader.
Their scale also often offers activist shareholders multiple levers to pull - including cost cutting, brand divestments, operational improvement and the adoption of new technology - as they look for growth and higher margins, he added.
Billionaire activist fund manager Nelson Peltz took a seat on Unilever's board in July 2022, having praised the maker of Dove soap and Ben & Jerry's ice cream for its strong brands and international footprint. His New York-based fund Trian is now the company's fourth-biggest shareholder, according to LSEG data.
Artisan's Samra said Peltz's presence at Unilever gave him "confidence". Samra's fund has built a roughly $900 million stake in Unilever, having bought shares during the second quarter when the price declined, Artisan told Reuters.
The stake would make it Unilever's 13th largest shareholder, the LSEG data said.
"We're not active with Unilever. We don't need to be because Nelson Peltz is doing it," Samra said.
Peltz is known for his interest in consumer-oriented firms and for his role in reshaping H.J. Heinz as well as engineering the break up of Cadbury Schweppes.
Shortly after his arrival on the board, Unilever appointed a former Heinz executive as CEO.
Unilever's food business has struggled with slow growth for years, fuelling speculation it could be spun off.
Unilever and Trian declined to comment for this story.
'Advocating For Management Change'
Gianluca Ferrari, founding partner of investor Clearway Capital, said his firm had some consumer companies on its radar but declined to name them.
The Frankfurt-headquartered fund does not publicly disclose its assets under management.
With inflation running high in many economies, Clearway is looking for companies with strong brands and potential pricing power that would help to insulate them from it.
"If we feel the board and management are underpricing their products, that's a perfect reason for us to go in and take a very close look at a business with the intention of engaging," Ferrari said.
"There is one situation that we're having a very close look at where I think advocating for management change would probably be the right thing to do," he added.
Clearway last year pushed for change at sports supplement maker Glanbia Since Clearway's letter to Glanbia's board in May 2022 calling for a break-up of the company to help unlock value, the Irish company's share price has jumped about 39% and its longtime CEO plans to retire.
Glanbia did not respond to a request for comment.
Read More: Hugh McGuire To Succeed Siobhán Talbot As New Managing Director Of Glanbia
Purchased Stake
At the end of 2020, Bluebell Capital also bought a stake in Danone and, according to media reports, joining Artisan in lobbying for the removal of then-chairman and CEO Faber.
Bluebell declined to comment on its engagement.
"Danone was significant because there is less of a history of activism in consumer staples in Western Europe, and it was a CEO change led by shareholders -- there was probably too much complacency from the board," Nicolas Ceron, a portfolio manager at Bluebell, told Reuters.
He declined to confirm if Bluebell, which does not disclose its assets under management, still held a stake in Danone.
Underperformance
Ceron said that, although boards had become quicker to tackle underperformance, he saw a number of situations among consumer staples companies where things could be improved.
"There are more opportunities in global consumer staples for activists over the coming years, but the timing has to be right," Ceron said.
He did not cite specific companies.
Room For Improvement
Several top industry executives - including at Diageo, Reckitt, Danone and Kraft Heinz - announced over the past year they are stepping down.
In some cases, the departures have been driven by the executive's desires for a change of lifestyle in the wake of the global pandemic, said Andrew Hayes, global head of executive search firm Russell Reynolds Associates' consumer practice.
Some companies, however, felt that the business environment in the wake of the pandemic - characterised by supply chain issues, squeezed margins and slow growth - required a new kind of leadership, according to John Long, North America retail sector leader for rival search firm Korn Ferry.
"The CEOs that were able to navigate a crisis like the pandemic are not necessarily the same people who can foster growth," Long said. He did not identify specific executives nor disclose the nature of his work with consumer companies.
Unilever's former CEO Alan Jope departure's after 38 years at the company was announced in September 2022, months after Peltz joined the board in July.
Unilever's longtime finance chief, Graeme Pitkethly, is also exiting by May 2024 after more than two decades at the company.
Peltz did not respond to a request for comment on whether he influenced Jope's departure.
Possible Candidate
In October, Reuters reported that Peltz had approached former CEOs of consumer goods companies as candidates for the Unilever top job.
When Hein Schumacher was appointed, Peltz said he had been "impressed by his leadership skills and business acumen" when he had known him at Heinz.
Peltz in 2006 also won two seats on the board of H.J. Heinz - now Kraft Heinz - after waging an acrimonious, costly proxy battle.
Reflecting on the experience, Heinz's then-CEO, Bill Johnson, told Reuters: "Nelson turned out to be a great contributor even though there were times we disagreed on issues and sometimes it got rather rancorous."
"We all like to think as CEOs that we're above that," he said. "But there's no company in the world that's safe."
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