What's going on?

Danone�s earnings met analysts� estimates on Friday, after the world�s biggest yogurt maker did a good job of meeting the world�s bacterially fermented needs.

What does this mean?

Covid�s side effects go way beyond loss of smell and shortness of breath: lower birth rates and widespread lockdowns are high on the list too, and they�ve hit Danone�s baby food business and bottled water sales hard. That led to the company�s first annual sales drop in three decades, even as rivals Nestl� and Unilever managed to grow their sales last year.

That might explain why there was a lot more talk about Danone�s turnaround plan than there was last quarter�s numbers at the earnings update. And that apparent willingness to make the necessary changes � along with the company�s promise to give more details on its �return to growth strategy� next month � seemed to do the trick: its stock initially surged after the announcement.

Why should I care?

For markets: Activist investors step in when things aren�t working.

Danone has been trying to offset slower growth in its dairy segment in the last few years by diversifying into fast-growing segments like probiotics and plant-based ingredients. But investors aren�t convinced the change has been happening quickly enough, and Danone�s share price has slipped to its lowest in seven years. So now, a growing number of activist shareholders have been putting pressure on the company for a complete overhaul � from changing its management to splitting up its businesses (tweet this).

The bigger picture: It works wonders when firms focus on things that matter.�

Nestl�s investors have already been there and done that, putting the Swiss food giant under similar pressure back in 2017. Since then, it�s restructured almost a fifth of its businesses by selling off underperforming ones so it can focus on fast-growth areas. And the move seems to have paid off: Nestl�s shares are up 25% in the last five years � outperforming Danone�s by 45%.