Cécile Cabanis, chief financial officer, said consumers are expecting a lot more from the food they eat. They want to know where their food comes from, how the ingredients were sourced and what it’s made with.
“They want to understand what the brand stands for in terms of environmental and social impact and commitment,” she said Sept. 5 during the Barclays Global Consumer Staples Conference in Boston. “And at Danone, we’ve been pioneering this. It’s in our genes, in the way we’ve been doing business for a very long time.”
Danone’s business structure features three distinct units — Specialized Nutrition, which includes early life stages and medical nutrition, Water and Essential Dairy & Plant-Based.
“… Around 90% of our products are recommended for daily consumption,” Ms. Cabanis said. “And this is based on public health studies, which is another proof point of the way we’ve built the business and the competitive advantage that we can have to be uniquely positioned in this revolution.
“All research shows that in our categories (the) growth outlook is between 5% and 9%, and … is superior to the average growth of the overall food and beverage industry.”
Yet the challenge facing Danone management is reaching consumers in a relevant manner and converting that interest into repeat purchases.
“Today, when you look especially at new generations, first, you see that people are willing to pay more for healthier and quality food,” Ms. Cabanis said. “You see that most of the growth is now coming from local brands.
“We are transforming our portfolio of product to be more local, more authentic, more natural. And you will see that we’ve been doing a major step-up into innovation and the way we innovate much more locally…”
She said the days of generating “massive volume” are gone.
“You have to be locally relevant,” she said. “You have to be much more flexible … and much faster in the way you go to market.”
Francisco Camacho, executive vice-president of Essential Dairy & Plant-Based, cited data showing the global market for products containing probiotics to be growing at 6% annually, the market for plant-based products growing at 8%, and the market for products featuring protein growing at 10%. But, he added, is the market is becoming much more “fluid.”
“…In the past, we used to look at the categories as boxes, individual boxes that didn’t touch each other,” she said. “When, in reality, what is happening is that, today, it is a much more fluid environment in which the boxes mix with each other. So, if today we’re selling cold brew coffee with probiotics and high in protein, what is that? Is that a probiotic product or is that a coffee, ready to drink?
“And that only proves that all the categories are mixing with each other, and we need to find the right combination to look for those places and those spots in which the growth is going to be stronger and the value creation for everybody is going to be better.”
To achieve its goals, the Essential Dairy & Plant-Based business unit is focusing on several strategic levers, including winning with millennials, owning probiotics, protein and “soft functionality,” and accelerating its plant-based business.
With younger consumers, Mr. Camacho said the challenge the company faces is capturing the younger consumer but also not alienating existing consumers. To achieve this, the company is rejuvenating existing brands like Light & Free in the United Kingdom or revamping its So Delicious brand. It also is reaching younger consumers at “different touchpoints.”
“…We have to do that through precision marketing, which we are becoming very active and very good at doing it, and obviously, with different type of partners, such as Spotify,” he said.
To grow its probiotic and protein businesses, the company has introduced such innovation as Activia Shots. With interest in protein, Mr. Camacho said the trend is not exclusive to the United States and the company is looking to expand globally.
In plant-based, he said the category is growing strongly and forecast to continue doing so.
“…even in the strongest market like the U.S. and Belgium, the penetration of (plant-based) beverages is way behind that of milk. And when it comes to yogurts … the penetration gap between dairy yogurts and plant-based yogurts is still huge. So, obviously, the opportunities are out there.
“People are eating in a different manner. One-third of people declare themselves as flexitarian. And importantly, 80% of households that buy plant-based products, they also buy dairy-based products.”
He said demand for soy- and almond-based products is strong, and that demand for oat-, coconut-, cashew-, rice- and chickpea-based products also is growing.
“We are expanding aggressively into adjacencies, such as coffee, coffee creamers, ice creams, cheese,” Mr. Camacho said. “And evidently, this will provide for further growth potential.”
The company is growing the Alpro brand in Europe and expanding the Silk brand’s presence in Latin America.
Source:Baking Business
