Groupe Danone SA (EPA:BN), the world’s leading fresh dairy producer, said it will cut around 900 jobs in Europe over the next two years as a result of falling demand in the region.  

According to a statement released by the Paris, France-based company, the world's largest yogurt maker suffered last year in Western and Southern Europe, where competition from new and cheaper brands challenged its blockbuster products — Activia yogurt and Actimel yogurt drink — hitting revenue and operating profit hard.

"Clearly this situation isn't sustainable and we will overcome it," Danone Chief Executive Franck Riboud, said in the statement.

Danone said it plans to cut jobs in managerial and administrative positions across 26 European countries as part of its existing plan to save about $267 million across the region. The group said it would create regional units, rather than country-by-country management structures, and will merge management functions. The plan will be presented to work councils today.

"2013 will be a year of transition, with vigorous development in business in our growth markets and a drive to strengthen operations in Europe. A year aimed at returning our activities as a whole to strong, profitable growth by 2014," he said.

Besides cost cuts, Danone is working on ways to revive sales in key markets such as France and Spain, which has been particularly hard hit by rising unemployment. New efforts will include innovative packaging for its Activia yogurts in several European markets, new recipes for some of its dairy brands and the launch of new Greek yogurt products in various markets, the Wall Street Journal reports.

Danone said it would continue to operate in all of its European markets while vying to meet an underlying sales growth of at least 5 percent for this year.