Michel et Augustin

We had a very inspiring conversation with Michel de Rovira, co-founder of Michel et Augustin, in which we heard the story of the company that he and Augustin Paluel-Marmont started from bottom up. Within our conversation we heard the different challenges that the company has had and what follows for Michel as an entrepreneur after the sale of the company to Danone.

Michel et Augustin is a French gourmet snacks and drinks company founded in 2005 by childhood friends, Michel and Augustin from INSEAD and EAP respectively. Starting up in a highly competitive market with business degrees on their backs, they set forth to differentiate their brand using the iconic marketing style of F&B duo’s Ben & Jerry, which had no equivalent in Europe.

The idea was set up on simple values – taste above everything, using ingredients the customer could pronounce, and having a little bit of fun. Their first product was the typical French Sables, which they initially baked in bakeries in Paris which had spare capacity before slowly scaling up to have their own production facilities!

Bootstrapping to build their brand without multi-million dollar investments and budgets, they struck a deal with TGV to have their sables on the trains, which helped build the brand image, but also gave it a permanent consumer perception of a premium product. They chose to set distribution channels in cool and trendy places like salad bars and Monoprix’s premium ‘Monop’ stores to build a premium brand before going to mass retailers like Carrefour, where they would have just been ‘one amongst the many.’

One of the things that Michel highlighted the most was the importance of choosing your people wisely. The ideal Michel et Augustin employee is smart, a pragmatic and thorough thinker, passionate, curious, and fun! As part of their efforts to build a strong company culture, every employee took an exam for pastry chef from 2012 onwards to learn about the products they were making and stoke the passion for baking. Slowly diversifying into new products and geographies, Michel et Augustin started to attract investors like Danone Manifesto Ventures, which took up a 30% stake in the company in 2016, cranking it up to 77% in 2019 and eventually allowing for Michel and Augustin to hand over the baby they had raised together to a professional CEO – Sebastien Guillon.

But entrepreneurship journeys are never so smooth! And Michel et Augustin has not been the exception. In 2009, after the financial crisis, major retailers cut back on their buying, which put a screeching brake on the company’s 300% Y-o-Y growth to just 10% in 2009! To complicate matters, costs had been growing in line with revenue as they moved to a new office, invested in new IT infrastructure, and were planning a huge production expansion based on previous growth projections. More recently, in 2019 when they launched cold pressed juices, they realized they couldn’t compete in the market. Expansions into foreign territory didn’t go as planned – apparently all French food doesn’t export as well as cheese and wine! But the founders have been there every step of the way, gently guiding their brand back to greener pastures while keeping true to their values of CSR and being fair to their employees – something they hope stays rooted in the company values even after they are gone.

What’s next for Michel? In a candid interview, he told us it is very difficult to start something new after having tasted success – one is afraid of failure more than ever! But, after long periods of contemplation and discussions among friends with similar experiences, he is looking to start his entrepreneurial journey again, with a keen interest in sectors of F&B, FMCG, Sports and maybe even Trains – all sectors he is passionate about.

So why did Danone Manifesto Ventures bet so heavily on Michel et Augustin? We had the opportunity to hear from DMV. They looked at 4 main criteria:

• Year on Year growth: this was solid for 2013-2016
• Sustainability and CSR efforts made the company
• Strong company values
• Ease of incorporation with Danone and ‘group fit’

But DMV isn’t the typical VC – it’s a CVC. Only 1 out of 4 of their investment criteria are focused on growth and return, and they don’t have the pressure to invest their available money each year. The team is the investment arm of the Danone group, they don’t take outside funds so they can focus on building long term value. Also, they have a hands off approach, choosing to ‘invest in teams’, but they offer guidance wherever the company needs it – this way Michel and Augustin retained control of their company despite having divested their stakes, and Danone got the star co-founder team to lead the company till a steady new leader was found.