Functional foods boost dairy giants

- Last updated on GMT

Related tags: Cent, Nutrition

Dairy leaders continue to see the benefits from increasing consumer
interest in functional foods, with both Danone and Nestlé this week
reporting strong growth in probiotic and other healthy products,
report Danny Vincent and Dominique Patton.

Danone, the world's largest yoghurt producer, said sales of its probiotic drinking yoghurt Actimel were up 40 per cent in the first quarter, while the dairy business overall saw a 12.8 per cent increase in like-for-like sales for the first three months of the year, higher than its biscuit or bottled water divisions.

The company is aiming to end the year with organic growth of between 5 and 7 per cent, with its health-based products likely to feature strongly once again.

Added-value dairy has also seen highest growth in Nestlé's first quarter, where sales were up 7.6 per cent, ahead of the underlying growth of 5.1 per cent across the group.

Its milk, nutrition and ice cream business reached sales of SF5.3 billion (€3.4bn), making it the largest single business unit within the company.

"This sector witnessed good growth due to two factors: the company's policy in innovation and the changing economical environment,"​ explained Nestlé spokesman François-Xavier Perroud.

Products such as milk powder with added omega-3 fatty acids and calcium performed well across core markets, he said.

Nestle CEO Peter Brabeck has often stated his interest in growing the firm's healthy products, last year promising increasing activity in infant and medical nutrition. The company invests SF1.4 billion (0.9bn euros)in R&D every year, he told an interview with the Lebensmittel Zeitung​. The figure represents 2 per cent of total costs on R&D, compared to Danone that spends 1 per cent, according to a recent report from Goldman Sachs.

Dairy has seen the majority of functional food innovation in recent years, and with Nestle and Danone the only companies active in every sector of the industry in western Europe, strong growth looks set to continue.

Related topics: Market Trends

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