Danone Shifts $1B Away from Dairy as WhiteWave Merger Finalizes

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Danone Shifts $1B Away from Dairy as WhiteWave Merger Finalizes

image/WhiteWave Foods

WhiteWave Foods Co., leading U.S. producer of nondairy milk, yogurt, and ice cream, is driving the marketing direction of its new parent company, France’s Danone SA, even before the merger is finalized.

The multinational food group acquired the Colorado-based company last summer in a $10 billion deal set to settle in the coming months. Now, Danone says it’s going to cut about $1 billion in costs over the next three years, particularly from its dairy sector as its fresh dairy unit is slow to show anticipated growth, particularly in European and Chinese markets. Sluggish sales of dairy coupled with rising dairy prices and increased demand for nondairy beverages make the future of dairy uncertain for the yogurt leader while plant-based products continue to see accelerated growth in all channels.

Danone says it’s going to review its financial goals once the WhiteWave merger is completed in the first quarter of 2017. WhiteWave saw an increase in net sales of three percent in the fourth quarter of 2016, boosting earnings to $1.1 billion ahead of the merger.

“The new savings plan - called ‘Protein’ by Danone - will aim to cut spending on marketing and general expenses such as corporate travel, and will be partly used to fund future growth,” reports Reuters.

“Analysts have been hopeful that WhiteWave's expertise in more trendy areas of food could give the legacy yogurt leader a boost,” reports Food Dive.

Danone owns Dannon yogurt, Activia, Oikos, as well as organic yogurt producer, Stonyfield.

While WhiteWave owns numerous dairy brands including Horizon, one of the leading producers of organic milk products. Its best-selling nondairy brands Silk and So Delicious continue to drive the plant-based nondairy milk category, which is experiencing significant sustained growth despite efforts from the dairy industry to restrict use of the word "milk" on plant-based beverages

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