- Danone's plans for growth will rely on healthy eating, plant-based products and popular dairy categories, including a pledge to triple its global plant-based sales from $1.9 billion to approximately $5.7 billion by 2025, Food Ingredients First reported.
- Chairman and CEO Emmanuel Faber said during a recent investor seminar that the French food giant will emphasize core plant-based beverages and yogurt categories and look for potential in additional dairy and plant-based businesses. This is likely to include acquisitions by Danone Manifesto Ventures, the company's New York-based investment arm established in 2016.
- "We are developing our unique portfolio of health-focused and purpose-led Manifesto brands, acting as a catalyst for consumer reach," Faber said, according to Food Ingredients First. "Our growth strategy focuses on valorized innovations to address some of the fastest-growing trends, notably among the younger generations."
Danone has shown a willingness to take big steps to expand and reposition itself. Exhibit A was the company's $12.5-billion acquisition of WhiteWave announced in 2016. This was a smart acquisition, which brought together organic plant-based foods and beverages and conventional products under the DanoneWave brand umbrella. The combined brands give Danone a strong platform from which to dominate the plant-based space, although whether it will be able to achieve three times its current plant-based sales by 2025 remains to be seen.
The company's chairman and CEO said he believes Danone is uniquely positioned to take advantage of today's consumer-led food revolution, so the company will be smartly focused on trends as they emerge, including plant-based foods and beverages, local sourcing and safer ingredients.
This also means focusing on what North American consumers want since sales here make up about 20% of Danone's worldwide total, or about $6 billion, Faber told Bloomberg in a September interview. He added that all products Danone sells in the U.S. are also produced here, tapping into the desire for local food.
As with other CPG companies, millennial consumers will be key to how Danone moves toward additional growth, and that fact will prompt more innovation in plant-based coffee creamers, high-protein yogurt and probiotics, Faber told Bloomberg.
The company's view is that its conventional brands, such as Dannon and Activia, plus the plant-based Silk and So Delicious brands, and premium and organic dairy brands, such as Wallaby and Horizon, put Danone in a position to "better serve consumers' diverse preferences in high growth and evolving categories."
The most recent earnings report supports that view. Danone posted its fifth consecutive quarter of growth in North America in the third quarter, with sales increasing 2.7% over the same period in 2017. Much of that growth was driven by yogurt, as well as probiotics, and kid-targeted and plant-based products. The latter included Silk and So Delicious, which benefited from ongoing consumer demand and Danone's successful expansion into adjacent segments, including mousse and ice cream.
Plant-based dairy products have continued to get more popular in recent years, therefore that trend is likely to continue. According to Innova Market Insights, alternative dairy beverages comprised more than 8% of global dairy launches last year. The research firm added that one in three U.S. consumers increased their consumption of plant-based milk and yogurt between 2015 and 2017.
Meanwhile, Danone Manifesto Ventures has been investing in an array of startups, such as coconut water brand Harmless Harvest, "deep ocean water" brand Kona Deep and organic baby food brand Yooji, among others. And there will be more coming since the venture arm plans to buy six or seven new companies a year, as long as they value sustainability and healthfulness. Danone North America achieved Certified B Corporation status this past spring, so consumers will be expecting the company to emphasize social and environmental performance, transparency and accountability as it plots its path to future growth.