This year, Danone plans to introduce a new milk substitute platform.
Later this year, Danone SA intends to introduce new plant-based milk substitutes with better flavor and texture. During a July 29 earnings call to discuss first-half results, which saw net income grow 5%, executives provided little details about the platform.
Shane Grant, the CEO of North America and co-chief executive officer of Danone, stated that “the current landscape in beverage is based on an ingredient analog: almond, oat, and soy.” The true potential that we observe is that convention’s challenge. It is known that 60% of customers in major plant-based economies, such as the US, do not fall into this category. We are aware that the flavor and texture of the product are the main obstacles. In response to this potential, we will provide new dairy-like technology under the brands Silk NextMilk, So Delicious Wondermilk, and Alpro is not milk.
We hope to introduce these platforms on a large scale later in the second half, as we have evidenced through consumer testing that we can match or surpass traditional dairy milk preference while attracting new plant-based consumers.
Danone, a Paris-based company, announced net income of €1.07 billion ($1.27 billion), or €1.63 ($1.94) per share on common stock in the first half of the fiscal year. This is an increase from €1.02 billion, or €1.55 per share, in the same period last year.
Net sales for the first half fell 2.9% from €12.19 billion to €11.84 billion ($14.07 billion). The decline was caused by an exchange rate impact that was 5.5% negative. Comparatively speaking, sales went up 1.6%. Sales climbed by 3.6% in the second quarter, or 6.6% on a like-for-like basis.
Driven by milk, milk components, packaging, and logistics, Véronique Penchienati-Bosetta, co-CEO of Danone and CEO of International, noted that inflation reached over 7% in the first half. Overall, the margin was impacted by inflation by almost 420 basis points.
“We delivered record-high productivity during the period with a positive contribution to margin of approximately 320 bps (basis points) despite these extraordinary headwinds,” the spokesperson stated. “This was notably accomplished through new efficiency streams like the SKU (stock-keeping unit) rationalization program and increased productivity.”
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According to her, Danone anticipates a significant uptick in inflation in the second half of the year.
Sales in the company’s core plant-based and dairy business dropped 2.9% in the first half to €6.41 billion from €6.60 billion. Comparatively speaking, sales increased by 3.2%. Dairy sales increased, and for the sixth consecutive quarter, plant-based sales surged by double-digit percentages. Operating profit decreased 2.7% to €584 million from €598 million.
“Our entire yogurt business in the US saw solid growth and winning share in the first half thanks to the acceleration of the Greek portfolio,” Mr. Grant stated. “The relaunch of Oikos, the double-digit growth on Oikos Black, the introduction of new Oikos Pro and core ranges, and the ongoing expansion of the core Two Good brand were the highlights of Q2 performance.”
According to him, Danone is launching a broad range of oat-based milk substitutes under the Silk brand and funding a “Milk of the Land” campaign for almond-based milk substitutes in the US.
Sales of Specialized Nutrition decreased 6% in the first half to $3.51 billion from $3.74 billion. Like-for-like sales decreased by 2.6%. Operating profit dropped from €987 million to €804 million, a 19% decrease.
Sales at Waters increased 3.5% in the first half to $1.92 billion from $1.85 billion. Comparatively speaking, the rise was 4.5%. On a like-for-like basis, revenues rose by about 20% in the second quarter. Operating profit rose from €117 million to €163 million, a 39% increase.
According to Ms. Penchienati-Bosetta, “Europe delivered a steep double-digit growth with an acceleration of the recovery throughout the quarter, mainly driven by increased brand support, strong market share gains, and mobility recovery.” “China’s Mizone recorded growth for the third consecutive quarter.”