Danone gains ‘different perspective’ in baby food with Yooji tie-up

By Katy Askew contact

- Last updated on GMT

Danone gains ‘different perspective’ in baby food with Yooji tie-up

Related tags: Baby food, Infant, Organic food, Sustainable agriculture

Danone has taken a minority stake in organic baby food maker Yooji via its investment arm Danone Manifesto Ventures (DMV). FoodNavigator catches up with Yooji and DMV to find out what benefits the tie-up brings.

Danone became a shareholder in French organic baby food business Yooji last week. The French food giant teamed up with Yooji’s existing shareholders, Caravelle and Capagro, as part of a capital raising.

While full financial details of the transaction were not disclosed, Laurent Marcel, general manager of DMV, revealed: "With its third capital raising, Yooji has just raised €4m. Danone Manifesto Ventures has participated in the round alongside Yooji's historical investors."

Marcel said that DMV was attracted to Yooji because it fits the group’s “mission”​ to “invest in young, disruptive companies”​ that “share our vision of a healthy and sustainable food future”.

The deal is DMV’s fourth investment since the venture capital fund was established in 2016. Previous investments include premium biscuit-to-dessert maker Michel & Augustin in France, vending machine salad maker Farmer’s Fridge in the US and Accel Foods – an investment fund specialising in “disruptive”​ food and beverage companies – also based in the US.

Danone learning from disruptors

For Danone, the investment in Yooji provides a window into the world of the more agile start-ups that are currently shaking up the food and beverage sector.

“[DMV’s] goal is to invest early in a high growth potential start-ups in the F&B space, providing interactions between Danone’s teams… and younger disruptive businesses that will inspire Danone’s employees to accelerate the generation of new ideas and practices,”​ Marcel explained.

The deal was completed in “close collaboration”​ with Blédina, the Danone-owned brand that leads the French baby food market. The new arrangement will mean Blédina “will be able to discover innovative and inspiring new ways of working,”​ Marcel said.

Jean-François Hurel, DMV head of investment, added that Yooji – which will continue to operate on a stand-alone basis - provides a “different perspective”​ on the baby food sector.

“As a historical player in that category, we are working to transform it by inventing solutions for every parent and every baby. We live a period of exciting society transformation. Very active young parents need… simplicity and naturality, local, collaborative, direct relationship, to prepare food for their children.

“Our way of working also changes and our projects can be co-created with our ecosystem (parents and partners). This is the Danone Alimentation Revolution for early childhood, and it is within this framework that we are very happy to start this project with Yooji."

Opening up organic

While Danone’s Happy Family business in the US focuses on the organic baby food sector, the French food group is less active in organic in Europe. Brands such as Blédina in France and Cow & Gate in the UK primarily operate in the conventional baby food space.

The French food sector is stepping up its organic production in response to growing consumer demand for organic products, according to sector body Agence Bio.

During the first six months of 2017, organic sales increased by €500m year-on-year. The organic sector was worth €7bn in revenues for 2016, Agence Bio noted.

This growth was driven by sales of fruit and vegetables as well as other grocery items. Fruit and veg – the largest segment of the organic sector – increased sales by 12%. Sweet and savoury grocery, led by breakfast items, grew by 24% year-on-year.

Notably, Agence Bio said, growth was seen in large- and medium-sized outlets – hypermarkets, supermarkets and hard-discounters - where organic sales increased by 18% in the period. Online organic sales rose 31% but from a lower base. Sales in speciality organic stores were up by 12% - or €156m – in the six months.

Yooji’s proposition of “healthy and innovative”​ organic single-serve frozen baby food is therefore “complementary”​ to Danone’s existing portfolio, Marcel noted.

As a minority investor working alongside an independent Yooji, Danone will benefit from “learnings”​ about how the smaller group operates and innovates, its relationship with consumers and the high-growth organic baby food sector.

According to Yooji founder Frédéric Ventre, who will continue at the helm of the business, organic baby food has a particular appeal for millennial parents. “Parents of babies are millennials and millennials are increasingly health conscious and looking for natural, minimally processed foods. And the stakes are even higher when it comes to their babies. Even though non-organic baby foods really are very safe and perfectly fit their babies’ needs, organic food is seen as better by some parents, as long as they can afford to trade up,”​ Ventre told FoodNavigator.

Ventre believes that Yooji’s proposition is the main reason why it has been able to connect with consumers and scale up rapidly since its 2012 formation.

“Yooji has developed an innovative offer of portionable, frozen organic food for babies of four months and over. The products are cooked and prepared in France near Agen… using carefully selected, 100% natural ingredients with no added salt or additives.

“The baking and fast freezing techniques allow for the conservation of the organoleptic and nutritional quality of the ingredients. In this way, parents can benefit from recipes which are nutritionally adapted to their babies, very close in taste to home-made meals, and especially practical and appropriate to the needs and appetite of their baby.”

The group produces about 20 SKUs and Yooji’s products are old in over 600 stores or collection points in France, including supermarkets, organic stores and on online retailers.

Financial resources – and more

Yooli’s latest funding round raises capital to support investment in growth initiatives.

While Ventre sees a number of growth opportunities – including international expansion and growing its range in areas such as toddler meals – the company is currently focusing on growing its core business in France.

Organic baby foods have been growing fast for the last ten years in France, as everywhere else in the world, probably for the same reasons.

“Our short-term priority remains the French market: France is the second biggest market worldwide for solid baby food after the US,” he noted. “We remain focused on our existing range of products, which fits babies from four months and older.”

Collaborating with Danone also offers Yooji some additional benefits, Ventre explained.

“Danone Manifesto Ventures is more than a financial investor, it is the investment fund created by Danone to invest in young agri-food companies and food tech companies with high potential, ability to innovate and their CSR commitments. Because Danone is an expert and leader of infant feeding in France with Blédina, this investment is for us a strong signal sent to the market, in particular to our distributors; it is the recognition of our work, the relevance of our products and their potential.

“The teams of Danone Manifesto Ventures and Blédina will support Yooji in its development by using their expertise in various areas. These exchanges will help Yooji grow.”

DMV’s Hurel added that Yooji will benefit from Danone’s “expertise”​ in areas such as marketing, distribution, operations. “These collaborations and exchanges will help Yooji grow, and bring lots of learnings to Danone teams.”

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