Danone sales up, despite weather issues

By Alex McNally

- Last updated on GMT

Related tags: Cent, North america, United states, Europe, Danone

Danone's sales for the first nine months of the year have been up
year-on-year - despite beverage sales down by more than 11 per
cent.

The firm said today overall sales were up 3.9 per cent from last year and will help the company complete its full-year outlook. The "friendly bacteria" containing Activia helped secure mid-teen growth in North America after being introduced to the continent at the beginning of 2006, a sign that the decision to launch the probiotic paid off. The healthy balance sheet has been a welcome confidence boost for the firm which is in the process of snapping up the Dutch baby food giant Numico, due to be complete next month. For the dairy section, Danone reported strong growth of 11.9 per cent. Biscuit sales were up 6.6 per cent. However, beverage sales were down 11.7 per cent, and according to the firm were "impacted by poor weather and decline in China."​ Danone chairman Franck Riboud said: "The double-digit growth, quarter after quarter, of our fresh dairy business, the capacity of our teams to proactively manage the unfavourable impact of increases in raw material prices, and market share gains in all major geographies are strong indicators of the resilience of our growth model. "This quarter's performance was indeed impacted by the unusually poor weather conditions in Europe, and continues to be affected by our dispute with one of our partners at Wahaha. This gives me additional confidence in our business prospects as we prepare to welcome Numico into the group by year-end.​" Sales in Europe were up from €6,500m in 2006 to €6,937m, an increase of 6.3 per cent, while sales in Asia fell by some €200m to €1,724m. A spokesperson added that growth in the dairy section was being fuelled by "blockbuster brands" and increasing at 20 per cent. They added that France and Spain experienced slower growth. The rest of Europe maintained double-digit growth, with Russia showing swelling rates above 30 per cent. Latin America saw sales climb in the mid-teens, supported by very strong growth in Argentina. North America accelerated its growth into the mid-teens thanks to continued strong growth of Activia and a favourable impact of the Danactive (Actimel) launch earlier this year. Bledina grew at above 10 per cent. In the beverage sector, sales were hit by poor summer weather in Europe and from the loss of all co-packed sales at Wahaha. The French bottled water market declined by approximately 20 per cent in value. The dispute between Danone's Chinese partners from Wahaha has not let up. Beverage figures in Asia include an estimate on sales, as Danone said access to full figures has been "constrained" by Wahaha. Excluding the entire Wahaha business from the 2006 and 2007 figures, the third quarter 2007 sales growth would have been down 3.3 per cent in beverages, and up 14.5 per cent in Asia, resulting in a total up by 7.5 per cent at group level. The rest of Western Europe saw similar trends with share gains in Spain, Belgium and Poland. Latin America maintained its superior sales growth achieving an uplift of 20 per cent. The firm is confident it will achieve full year growth of between six and eight per cent year-on-year. The full results will be ready in February.

Related topics: Manufacturers, Functional foods, Dairy

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