USA – Danone, a french multinational food and beverage corporation, is considering the sale of its US organic milk business called Wallaby and its organic milk counterpart, Horizon Organic, as part of its Renew Danone strategy.
CEO Antoine de Saint-Affrique came up with the strategy dubbed Renew Danone shortly after he was appointed CEO in September 2021.
Renew Danone has specific objectives to restore Danone’s competitiveness in core categories and geographies by creating suitable conditions for sustainable and competitive growth and to selectively expand Danone’s presence in the market.
The other objectives were to drive performance and growth and actively rotate the company’s portfolio.
Antoine de Saint-Affrique noted that the two brands are not part of the company’s main growth plans and are under strategic review as part of Renew Danone, which requires Danone to stay disciplined in how they allocate resources.
He said that through the lens of the renewal strategy, Wallaby and Horizon Organic fall outside the French corporation’s growth areas of focus, regardless of the brands being strong and well-loved with compelling growth opportunities.
“We are confident that exploring strategic options for these brands will enable them to get the focus and resources they need and therefore allow them to maximize their potential and unlock further growth,” he further communicated.
The brands have a vibrant portfolio of organic dairy products that include milk, creamers, whiteners, yoghurt, cheese and butter and a sale is the most probable outcome as was announced by Antoine.
Wallaby and Horizon Organic have a strong presence in the US dairy market although the company revealed that these brands represent only 3% of its global revenues and have a high dilutive impact on Danone’s like-for-like sales growth and recurring operating margin in 2022.
According to the company’s third-quarter financial results, they revealed that they were working on having “fewer, sharper and complementary brands,” eliminating “overlaps and cannibalization.”
In the American regions, Danone’s bigger brands reported immense growth leading to a sales increase of 11.3 % in the third quarter.
The sales volume was however up by 1% as the company increased prices to offset the pressures of inflation and drive growth.
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