Danone plans to triple health food sales - https://on.ft.com/2vIBUjI
Chief says French food group wants to encourage more sustainable eating and drinking
The boss of French group Danone that produces brands including Evian water and Activia yoghurt has set out plans to triple sales of health foods.
Emmanuel Faber, Danone’s chief executive, said the company was aiming for €5bn of sales from “plant-based” products by 2025, up from €1.7bn today, building on its 2016 acquisition of WhiteWave, an upmarket US foodmaker.
Mr Faber said there is “huge potential” for WhiteWave to sell new types of products as demand for organic, plant-based and GM-free food grows, and consumers look for healthier choices.
The top three fastest-growing food categories in the US in the past three years have all been healthy: plant-based, fruit and produce, according to market research company Nielsen. Four of the five weakest have been dairy based: milk products, yoghurts, other dairy and cheese.
At the moment, milk alternatives such as soya and almond make up about 80 per cent of Danone’s plant-based sales, while 15 per cent are from non-dairy yoghurts and 5 per cent from desserts. Danone wants to expand further into non-dairy ice cream, vegan cheese and vegan baby food, Mr Faber added.
“Danone has the healthiest portfolio in global food and we believe the structural growth of its plant-based portfolio is under-appreciated,” analysts at Barclays wrote last month.
The group also wants to widen distribution of plant-based products, with plans to market Alpro in Russia and Silk in Latin America. Both brands make dairy-free drinks and desserts.
The company hopes, Mr Faber said, to encourage consumers to adopt healthier and more sustainable eating and drinking habits, and aims to pursue a corporate model that extends beyond creating value for shareholders.
“If we don’t pay for sustainable agriculture, if we don’t pay for regenerative agriculture, there will not be agriculture,” he said. “Right now we are paying dividends, we are defining profits in a way which is simply not sustainable. We are shortening the cycle.”
Danone, which is 100 years old this year, is working towards “B Corp” certification by 2030, which means meeting a demanding set of externally-monitored social and environmental criteria. This month it will grant all of its 100,000 employees a share in the company, in order to make them feel more invested in its future. It is also launching a profit-sharing scheme for all employees.
For his part, the 55-year-old Mr Faber announced last month that he would forgo his retirement package, which analysts have calculated could be worth a total of about €28m. “It’s a totally personal decision,” said Mr Faber, who is paid an annual salary of €2.8m. “It’s consistent with the way I live and the way I want to live. And I do not have a need for what the market economy is allowing me to receive.”
Historically, Danone’s shares have traded at a discount to larger rivals such as Nestlé and Unilever because of “its reputation as a poor capital allocator”, notably paying a high price of $12.5bn for WhiteWave, according to Barclays analysts.
“We found it sometimes difficult to execute on the short term,” Mr Faber said. “The fact is that we have [had] some visible hiccups here and there and a trajectory of growth which has more volatility than some of our biggest competitors.” However, he said that Danone was improving its capital discipline, pointing to its plan to cut €1bn of costs in three years and its target to increase its margin to more than 16 per cent by 2020.
Mr Faber defended Danone’s long-term approach to sustainability. “This vision of the world is not going to be proven until it is in the share price of Danone,” he said. “It may take time because sustainability takes time.”