AI Could Change The Future Of Yogurt—And Turn Danone Around

At a new Danone facility near Paris, researchers feed dollops of yogurt into globular glass vessels and plastic tubes designed to mimic the human gut. Once the bacteria inside show they can survive the digestive juices, artificial intelligence is put to work to probe their potential health benefits.

To consumers bombarded with claims about the supposed power of probiotics, the goal may sound familiar: souped-up yogurt. But the owner of Activia and Actimel is betting technology can yield answers on which friendly bacteria work best and why, giving its products a scientific edge at a time when revenue is lagging and consumers are growing wary of processed food.

"The long-term business strategy of Danone is very much about turning around dairy," says Deputy Chief Executive Officer Juergen Esser. "Everything about bringing the right ferments, the right health benefits and making it shine to the consumer is critical."

Whether it's the start of a tech-powered food revolution or just another layer of savvy marketing intended to get consumers to pay more for a pot of yogurt, Danone needs it.

The 104-year-old French company is in its second year of a turnaround effort orchestrated by Esser's boss Antoine de Saint-Affrique. The dairy unit has suffered falling volumes in seven of the last nine years. Sales volumes in the division—the company's largest, with plant milks like Alpro as well—fell 4% last year as consumers traded down to cheaper brands in response to the cost-of-living crisis.

"The only way that Danone can revive its business is by investing in a superior product that would support better pricing power," says Bruno Monteyne, an analyst at Bernstein.

Danone is betting its dairy experience and its own library of bacteria will give it an edge over rivals like Nestle SA. The company spent about $100 million on the new facility that opened in February, bringing together the research lab that houses the robot stomach, co-working spaces and a consumer-testing area in a suburb best known for its nuclear research.

The labs have gained access to patient samples and health profiles for the AI to sift through with collaborations, including one project with the University of California at San Diego and another closer to home called Le French Gut that aims to analyze the microbiome of 100,000 volunteers.