Dive Brief:
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WhiteWave Foods reported a 5% boost to its third quarter net sales to $1.05 billion, and a 6% increase based on constant currency, according to the company’s earnings report Wednesday.
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Net income rose 16% to $58 million, while operating income also jumped 17% to $109 million for the quarter. Diluted earnings per share increased 15% to $0.32 per share.
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WhiteWave’s stockholders also approved Danone’s takeover agreement last month, which finalized at $56.25 per share.
Dive Insight:
WhiteWave’s segment growth remains strong, but not as robust as past quarters. This could signal challenges from increasing competition, including both startups and new products from major manufacturers trying to capitalize on growth in these segments.
The plant-based foods and beverages platform saw net sales rise 10%, driven by strong growth from plant-based yogurt, frozen desserts and nutritional products. However, that growth came in below from the second quarter. WhiteWave attributes the slowdown in part to new Silk packaging designs that the company said “negatively impacted shelf presence and brand shoppability” in addition to a marked increase in competitive promotional and marketing efforts, per the earnings news release.
WhiteWave’s fresh foods segment continues to struggle, more so now than in past quarters. The company reported a 13% decline in net sales compared to the second quarter. The company is still dealing with the aftermath of SAP implementation-related disruptions to its supply chain and distribution. However, the company said the new warehouse it opened in the second quarter of 2016, which is now fully operational, will help rebuild distribution and return this segment to growth in the final quarter of this year.
However, without the Earthbound brand, the organic packaged salad category did post 9% growth for the quarter. Including Earthbound, the category grew 2%. WhiteWave continues to push innovations like chopped salad kits and frozen meal starters to revive the brand’s sales. Packaged salads meet consumer demands for both a healthy product and convenient meal, but the category is becoming crowded with competition from other manufacturers and retailers’ private label brands.
The premium dairy segment reported a 5% net sales increase for the third quarter, which was notably lower than growth in the second quarter. Wallaby yogurts were the main driver behind that sales bump, as organic sales were flat otherwise. The company points to “continued historically high price gaps to conventional milk” as the primary challenge this platform faces, according to the earnings news release. Consumers have shown their willingness to pay more for premium products, but as consistently low milk costs pressure dairy processors to cut prices, those gaps are becoming more glaring, which could turn away value-driven consumers.