- Danone acquired plant-based pioneer Follow Your Heart, the companies announced Thursday night. The transaction was a share purchase agreement, in which the French dairy giant bought 100% of the shares of Earth Island, Follow Your Heart's parent company. Financial details were not disclosed.
- Follow Your Heart celebrated 50 years in the plant-based food space last year. It is the maker of Vegenaise spread, dairy-free cheeses, plant-based dressings and VeganEgg. In 2019, Follow Your Heart Chief Operating Officer Martin Kruger said the company's revenues had grown fivefold since 2010.
- Danone pledged in 2018 that it would triple its sales in the plant-based space to 5 billion euros — about $5.7 billion — by 2025. Danone had a 41% market share in plant-based offerings through the third quarter of 2020, according to IRI data. The acquisition of Follow Your Heart helps bolster the company's plant-based portfolio, which also includes brands Silk and So Delicious.
With this acquisition, Danone owns several of the brands that literally started the plant-based foods movement. Follow Your Heart got its start in 1970 as a vegan lunch counter at a natural foods store in Los Angeles — which is still open — and moved into CPG production in 1988. Silk was founded in 1977 and debuted its soy milk in 1996. European plant-based dairy leader Alpro was founded in 1980. And non-dairy dessert pioneer So Delicious was founded in 1987.
Aside from being pioneers in the plant-based space, these Danone companies have another thing in common: They were all acquisitions. With its $12.5 billion purchase of the former WhiteWave Foods in 2017, Danone became a leader in plant-based food.
And the company has kept on going. According to its most recent earnings report, released Friday morning, 10% of Danone's total sales are in plant-based. In the earnings call, CEO Emmanuel Faber said the legacy WhiteWave businesses grew 11% in 2020, being the fastest-growing segment in Danone. All together, sales of Danone's plant-based brands grew 15% last year, the report said.
Earlier this year, Danone North America CEO Shane Grant said Danone was accelerating its expansion into fast-growing categories popular with consumers, including plant-based. Last year, Danone created a plant-based acceleration unit in its European business division, with the goal of expanding the company's plant-based brands globally. And the company has invested in several alternative protein companies through its Danone Manifesto Ventures arm, including Laird Superfood, Forager Project and Nature's Fynd, which was previously known as Sustainable Bioproducts.
Not only are Follow Your Heart's market-leading cheeses, Vegenaise spread and egg substitutes popular with consumers already, but they add several new dimensions to Danone's plant-based capabilities. So Delicious just launched the company's first plant-based cheese last month, but that's where the overlap ends. In an interview with Food Dive earlier this year, Grant said Danone was considering getting into vegan mayonnaise and egg replacements, but did not indicate that could be through an acquisition.
The acquisition may help Danone beyond the portfolio and brand expansions. Last month, activist investor Bluebell Capital Partners criticized the company's "disappointing" stock price and called for it to search for a new CEO. Adding a well-known and storied plant-based brand to its fold could give Danone the stock market boost it needs to satisfy investors.
While Danone is committed to expanding plant-based food, it's also made a commitment to doing good in general, which may help it with acquisitions in the space. Danone North America is the world's largest B Corp, a ranking that is earned through measured commitments to transparency, sustainability, social issues and accountability. Follow Your Heart has been a mission-based company from the beginning, and it's unlikely it would sell to a company that did not also have strong social and environmental commitments. In a conversation with Food Dive in 2019, Follow Your Heart co-founder Bob Goldberg said he didn't get into the business to make money.
"We very much believed in what we were doing," Goldberg said. "That it was the right thing to do, that it's the right thing for the planet, the right thing for animals. And it just didn't make sense to us to do anything differently than that."