As consumers increasingly demand specific qualities in the foods and drinks they consume, Danone North America has focused its attention on assembling a portfolio of "tools and weapons" to woo consumers and generate growth — no small order for a company with $6 billion in annual sales.
"We need to keep reinventing ourselves from within," Mariano Lozano, CEO of Danone North America, told Food Dive. "We need to follow the pockets of growth of where the consumer is. The consumer is moving to have very specific needs and for that, we believe you are better equipped in having a variety and broad spectrum of brands, a variety and broad spectrum of capabilities."
Danone North America, the combination of French food and beverage giant Danone's U.S. operations with its 2017 acquisition of WhiteWave Foods, has a portfolio that includes products geared toward specific trends like probiotics with Activia, kids' snacks with Danimals, Greek yogurt with Oikos, Horizon organic milk and plant-based options including Vega, So Delicious and Silk.
The division is on its way to being much more independent than most companies' regional arms. Danone Chairman and CEO Emmanuel Faber said in the company's 2018 financial report that it is "delayering" to try to move away from being a monolith.
"With this, we are becoming the most localized of our peers, prepared to capture the underlying value of the biodiversity of local food cultures and agricultures in tune with the new eating and drinking paradigms," Faber said in the report.
To boost its presence, the French-based company recently introduced a Greek low fat yogurt with two grams of sugar called Two Good; a plant-based yogurt option made with almond milk named Good Plants that has 40% fewer calories and 70% less sugar than other options; and Oat Yeah, a new variety under the Silk line. It recently opened a multi-million dollar expansion of a facility in Pennsylvania focused only on making plant-based foods.
"We truly believe we are operating in categories that are on trend and underdeveloped," Lozano said. "Today, we have a lot of innovation being thrown to the market, but also because we are almost a $6 billion company acting in a variety of categories."
Across the company's 20-plus brand portfolio, Danone North America offers products with a host of characteristics in demand with consumers, including probiotics, grass-fed, organic, non-GMO, low sugar, plant-based and traditional dairy. It's also tapped into those eager to indulge with an Oikos version that has twice the amount of cream as a normal variety. Lozano noted the company could one day take an attribute tied to one brand, like probiotics in Activia, and bring it into another such as Horizon or Silk.
Danone North America's portfolio also includes organic salad maker Earthbound Farm, Stok Cold Brew coffees and creamer maker International Delight, the single biggest brand in the food and beverage giant's portfolio with more than $1 billion in sales.
"You need to be very surgical in how you tackle those pockets of growth, so we believe in being a house of brands, in being and having all shapes and sizes," he said. "You have to have a variety of tools and weapons."
The company's Essential Dairy and Plant Based segment in North America delivered healthy 1.5% growth in the last quarter of 2018, according to the earnings report. Sales were up 2.2%, with solid performance in the plant-based segment, strong growth in coffee creamers, and growth in premium dairy for the first time since the WhiteWave acquisition became final.
Yogurt sales, the report said, showed moderate growth. The category has been highly competitive, but the company saw strong performance in Greek yogurt, Activia, and plant-based products.
The U.S. yogurt industry remains in a strong position as the product's perceived health benefits, flavor and format innovation — as well as its appeal as a convenient snack or meal replacement — have been driving growth. The market is worth about $9 billion. Sales are expected to grow at a steady rate through 2022, with drinkable, vegan and plant-based options as major contributors, according to Packaged Facts.
Eager to tap into this growth, yogurt makers like Danone have been innovating at a rapid clip in recent years. Chobani, which is a household name with its popular Greek yogurt variety, recently entered the kids space with a new line of yogurt products called Chobani Gimmies, and a plant-based variety made from coconuts named Non-Dairy Chobani. And General Mills' struggling Yoplait brand rolled out in 2017 a French-style Yoplait yogurt called "Oui" and last summer debuted YQ by Yoplait, a new yogurt variety that is high in protein and less sweet than other brands.
As the 2018 annual report shows, Danone is working hard to keep its showing strong in yogurt, and it's paying off.
"We remain very bullish to keep the good news and growth in this category," Lozano said.
Megan Poinski contributed to this report.