17 Apr 2019 --- Danone has reported first-quarter underlying sales growth of a relatively modest 0.8 percent to €6.138 billion (US$6.94 billion). Growth was attributed mainly to the plant-based and waters segments and is reportedly in line with expectations. Danone is, therefore, maintaining its full-year guidance.

However, the figures mark a slowdown from the 2.4 percent growth reported in the fourth quarter of 2018. This is partly due to the adverse impacts of decreasing early life nutrition sales in China “compared with the very strong +50 percent growth in Q1 2018.” This slowdown is in part attributable to a lower birth rate in the country.

“The first quarter showed a start of the year in line with expectations and further progress in our transformation journey,” says Emmanuel Faber, Danone Chairman and CEO. “This performance has coincided with continued action to deliver sustainable profitable value growth, including the sale of Earthbound Farm, alongside the roll-out of value-added innovations across businesses and geographies to make our portfolio more local, more appealing to younger generations and better suited to fast-changing consumer trends,” he adds.

“We are pleased with the momentum of the business, which will become increasingly visible from the second quarter. This gives us every confidence that we will meet our full-year guidance,” Faber continues.

Excluding Morocco, which was impacted by a boycott that started in April last year, the company reports sales were up by 1.5 percent on a like-for-like basis with volumes down by 1.0 percent. 

Essential Dairy & Plant-based reported sales up 0.2 percent on a like-for-like basis in the first quarter, including a 3.8 percent decrease in volume and a 4.0 percent rise in value. While the quarter confirmed the good fundamentals of the business, growth was impacted by one less trading day for our fresh activities in Europe and North America.

In North America, while category dynamics remained unchanged, sales grew at a lower rate than Q4, impacted by portfolio pruning and a one-off effect from the final stage of IT integration. In US yogurts, Danone is investing in growing segments such as plant-based, probiotics and low-sugar yogurts. 

Danone North America in January announced the launch of two individual yogurt lines that tap into both plant-based and sugar reduction trends. The first, coined Two Good Greek Lowfat Yogurt, is a dairy products line that touts indulgent taste, low calories and reduced sugar content. The second is Good Plants, a dairy-free, probiotic yogurt alternative, made with almond milk. Two Good will launch in February 2019, while Good Plants is already available. 

Danone in January added two new flavors to its popular Dannon Activia Probiotic Dailies line, launched last year in the US; this time fortified with prebiotic fibers. Served up in a convenient “daily shot” format, the yogurt-based dose promises to deliver billions of live and active probiotics and on-trend flavors: Lemon & Ginger and Honey & Ginger. 

The quarterly performance confirmed the stabilization of Europe, supported by value-added innovation momentum and investments in fast growing trends such as organic, probiotics shots, plant-based and on-the-go. 

Overall, the Plant-based segment, which represents around 15 percent of EDP sales, posted mid-to-high single digit growth, with all brands growing and extending their market presence, with the exception of Vega. 

Waters delivered a solid broad-based sales growth of 3.9 percent, driven by volume (+1.0 percent) and value (+2.9 percent). 

All regions contributed to this growth. In the US, Evian delivered strong growth as a result of expanded distribution and market share gains in convenience stores. Sales rose solidly in Asia supported by Indonesia. Growth was solid across Latin America wher the biggest brand in the region, Bonafont, was supported in Mexico by strong category momentum and successful consumer activations.

Specialized Nutrition reported sales up +0.4 percent on a like-for-like basis in the first quarter, including a 1.3 percent rise in value and a 0.9 percent decline in volumes, against a very tough base of comparison (with sales up 14 percent on a like-for-like basis in Q1 2018).

Sales growth was led by Advanced Medical Nutrition, which registered a mid-single digit increase, with strong sales growth was reported in pediatrics. Growth in Europe was enhanced by strong momentum in Poland and the Netherlands. Sales in China increased at a double-digit rate.

In Early Life Nutrition, as anticipated, growth was adversely impacted by decreasing sales in China compared with the very strong +50 percent growth in Q1 2018. Outside of China, performance was strong as Early Life Nutrition generated mid-single digit growth driven primarily by South-East Asia. Sales in Europe continued to be impacted by Aptamil in the UK, wher a business recovery plan is ongoing. 

During the quarter, Danone opened its new €240 million (US$271 million) Nutricia Cuijk production facility in the Netherlands. The plant will produce highly-specialized infant formula for health conditions such as allergies or digestive issues. It will manufacture infant formulas for vulnerable babies, particularly in relation to cow’s milk protein allergy (CMPA). Our sister website, NutritionInsight reported on the announcement last month.