French dairy firm Danone has unveiled a cost reduction and adaptation plan to generate EUR200m savings in Europe in the next two years.

With this move, the company is seeking to address the significant decline in sales in the region and regain its competitive edge.

As a part of the plan, Danone will lower general and administrative costs, and implement changes at the organizational level by eliminating jobs. The job cuts will affect management and support functions, and will be based on voluntary departures.

Danone noted that the cost cutting plan in combination with the ongoing productivity initiatives will free up the resources, allowing it to make its brands and products more competitive. The company plans to discuss the new cost cutting plan with the trade unions in March 2013.

Danone has been affected by the decline in consumption in Europe, where the company generates 42% of its sales. The company reported a 1.5% drop in sales in Europe for third quarter of 2012, compared to the previous year, with dairy sales in Spain and Italy falling by more than 10%.