- Danone, maker of Activia and Actimel yogurt products, said it expects lagging profit growth in 2017 and to compensate, will cut 1 billion euros ($1.1 billion) in costs by the end of the decade, according to Bloomberg.
- For the current year, the company is targeting earnings per share growth of a little over 5%, which would be the slowest rate in three years. As comparison, last year’s profit measure increased 9.3%.
- Danone’s like-for-like sales grew 2% in 2016, the slowest pace in approximately 20 years.
The yogurt industry has been hit hard lately, with many of the giants in the industry reporting weak sales. General Mills, for example, saw a 17% decline in yogurt in its most recent earnings report.
It’s not that yogurt products aren’t popular. In fact, Mintel’s latest study showed that sales of yogurt drinks grew by 62% between 2011 and 2016 to $893 million. However, factors such as rising milk costs and more companies fighting for market share are taking their toll on many of the companies.
France-based Danone aims to fix some of its problems with the anticipated $10 billion acquisition of WhiteWave Foods Co., which will bring a large supply of soy milk in house. As a smaller startup, WhiteWave is also more nimble and able to quickly change gears based on trends. With a more nimble category leader under its belt, it may be easier for Danone to figure out the best path to the future.
Additionally, the company has launched a new initiative called Protein, which is aimed at efficiency and will cut back on expenses including some of its marketing spend.