Danone in Sales Warning Amid European Dairy Woes

19 Dec 2016 --- Danone has said its full year sales will fall below expectations amid a turbulent European dairy market and an underperformance from its Activia yogurt brand. The world’s biggest yogurt maker issued the warning today saying that sales growth will be “slightly below target”.

It pinpointed “aggravated market conditions” in Spain as the cause of hurting revenues as well as sales of Activia not meeting expectations.

However, the French company was upbeat on its margins, which it said would top expectations.

Danone has relaunched Activia globally this year with a new design and visual identity in an effort to make it a more premium offering and strengthen its health proposition.

Danone said: “The implementation of Activia’s new brand identity across Europe has been well received by consumers and Danone will continue to build on it. Nevertheless, local execution plans are being reworked and teams have already started to implement them country by country.”

It did not disclose further details about its new execution plans.

Separately, the European Commission has cleared Danone to go ahead with its $10.4bn acquisition of US organic food maker WhiteWave Foods.

It has been given the green light on the condition that it offloads its “growing-up milk” business in Belgium.

The “growing-up milk” market is aimed at children between one and three years-old and includes WhiteWave’s Alpro brand.

The commission expressed concern that only Nestlé would have remained as a competitor if it didn’t sell the business.

"The Commission had concerns that the merged entity would not have faced sufficient competitive pressure from the remaining player in this market," the commission, which overseas competition rules in the European Union, said in a statement.

Danone announced its deal to buy WhiteWave in July this year, marking its biggest deal in 10 years.

The deal substantially boosts Danone's offering in the US by adding premium grocery brands such as Silk almond milk and Earthbound Farm Organic salad to its portfolio.