“The strategy to deliver on the €5bn ambition will continue to rely for one-third on growing the core business (in the US and Europe) and for two-thirds on expansion in new geographies and new categories,” a spokesperson told FoodNavigator.
“Today, Danone has built a material Plant-Based business in the US and some European countries such as Germany, the UK, Benelux or France. Beyond, we are looking at either further expanding or seeding the Plant-Based category; this includes Southern and Eastern Europe, Russia, but also, although we are still early stage, Latin America or Africa.”
The comments came as Danone announced the launch of a new business unit in North America devoted to the growth of plant-based products. Essential Dairy and Plant-Based (EDP) North America is Danone’s largest business unit, and Danone has announced that the unit will now “be recognised as a separate business” to strengthen the local focus of the business.
Danone said the Plant-based Acceleration Unit will seek to expand into new categories such as coffee, but will also leverage Danone’s plant-based expertise in categories such as baby food and healthy ageing food solutions, and by pivoting more of its large brands into the plant-based sector.
‘Pantry loading’ sales boost
The French firm recently reported resilience amid COVID-19. It withdrew its financial guidance for 2020 owing to the disruption caused by the coronavirus pandemic, but it posted higher first-quarter sales as shoppers bought more dairy, plant-based and nutrition products to eat at home.
Sales rose a stronger-than-expected 3.7% to €6.242bn in the quarter, it said, as it noted a “pantry loading benefit in Europe and North America in March”.
Finance Chief Cecile Cabanis said that consumers were opting for “indulgence and bigger formats” in dairy and plant-based goods, while brands like Actimel yoghurt - with immune system support claims - were in strong demand in Europe.
Strong performance on the dairy, plant-based and nutrition categories was offset by a 6.8% fall in water division sales, where demand was hit by the closure of restaurants and cafes. Around 40% of the division’s sales are normally consumed away from home, Danone said.
The pandemic will ‘change the way we live and do business for a long time ahead’
Explaining the decision to withdraw its financial guidance for the year, Danone Chairman and Chief Executive Officer Emmanuel Faber said in a statement: “The first quarter of 2020 will long be remembered as the time of an unprecedented pandemic, which may change the way we live and do business for a long time ahead.”
“Q2 demand and supply conditions will be broadly and deeply impacted by a global lockdown. Beyond the initial pantry loading trends we observed in March, we are unable to predict how the lockdown may affect both supply and demand, with significant differences depending on food habits and lifestyles and people’s income, all in a context of diverse local and national government lockdown strategies and exits, as well as their unknown success rate.”
Referring to the expansion of Danone’s Plant-based Acceleration Unit, Emmanuel Faber, Danone Chairman and CEO, added: “I am also convinced that, as our large countries are now entering into a lasting COVID-19 recovery phase, this increased regional focus will be instrumental to adjust and execute our strategies to the local policies and realities.”