Dive Brief:
- DanoneWave will spend up to $60 million to expand its plant-based beverage production facility and warehouse in Mt. Crawford, Virginia, according to Dairy Reporter. The investment is expected to add 49 jobs to the plant, which currently has more than 500 employees.
- Before French global company Danone bought Denver-based WhiteWave Foods earlier this year, the Rockingham County facility manufactured a variety of WhiteWave brands such as Silk plant-based foods and beverages, Horizon Organic milk products, International Delight creamers and Land O'Lakes dairy products.
- DanoneWave, which calls itself a "public benefit corporation," focuses on manufacturing better-for-you dairy products and plant-based alternatives using sustainable agriculture methods, according to Dairy Reporter.
Dive Insight:
Danone bought WhiteWave Foods in April for $12.5 billion in a move designed to diversify its portfolio and improve sales growth. The European yogurt giant hoped to focus more on the plant-based products that have become increasingly popular with U.S. consumers, and the acquisition more than doubled Danone's North American business.
The merged company made it clear from the start that it was committed to building up its profile in the plant-based beverage space. According to Mintel, U.S. non-dairy milk sales grew 9% in 2015 while dairy milk sales declined 7% over the same period. The refrigerator case at a grocery shows retailers are increasingly stocking more plant-based milks with fewer artificial ingredients, and that is not likely to change anytime soon. Any investment that DanoneWave makes in the sector now has a good chance of paying off in the near term.
The company is already doing well in that space. In the most recent earnings report, released earlier this month, Danone's North America Essential Dairy and Plant-Based unit posted sales of $1.5 billion in the third quarter, up significantly from $738 million for the same period last year.
After factoring in WhiteWave's sales as a stand-alone company last year, sales for the newly constituted company rose 4.7% to $7.61 billion compared to the year-ago period. Danone also confirmed its full-year guidance in October and expects to deliver double-digit earnings-per-share growth for 2017 of more than 12%.
Despite the positive marks for sales and popularity of plant-based beverages, the earnings report shows a decline in volumes. The company sold 2.7% less of the beverages than in the year-ago period, so there is room for expansion, which is where the investment will help. Increasing production of the on-trend line of drinks should be reflected in earnings reports shortly. Because of its size and investment capacity, DanoneWave will continue to be a major force in plant-based beverages.
DanoneWave is not the only big player in this hot field. Several startups are showing strength of late. One is Califia Farms of Bakersfield, California, known for its clean-label, plant-based beverages — with or without sugar added — that are available at Target and Giant stores. Another is Ripple, which makes beverages from pea protein and launched in Whole Foods and Target stores last year.
