Danone acquires Vegenaise producer after a tough year

Danone acquired the American plant-based food manufacturer Earth Island for an undisclosed sum. The French food giant also published its annual results today.

Realising the target

The acquisition should help Danone realise its ambitions target of generating at least 5 billion euros in turnover from plant-based food by 2025. Today, these revenues amount to approximately 2 billion euros. Earth Island was founded in 1988 and is the owner of brands such as Vegenaise and Follow Your Heart.

In 2020, the French group achieved a turnover of 23.6 billion euros, down 6.6 per cent on a reported basis and 1.5 per cent on a comparable basis. Operating profit fell 13.6 per cent to 2.8 billion euros.

Bottled water falls victim

All of Danone’s divisions were affected by the Covid pandemic, which caused rapid changes in consumer behaviour. At the same time, almost all costs rose, such as transport and raw materials. Last year, Danone lost nearly 1 billion euros or a fifth of its turnover and 340 million euros or half of its operating profit from bottled water alone. Multiple lockdowns caused people to stay at home, causing the demand for small bottles (with high margins) to collapse.

The dairy division, accounting for about half of the group’s revenue, held up best, losing “only” 2.6 per cent. The vegetarian and plant-based alternatives for milk and yoghurt, sold under the brands Alpro, Silk and So Delicious, did especially well, writes the Financial Times.

For this year, Danone expects a difficult first quarter as a result of the ongoing business closures due to Covid. The dairy giant expects to return to profitable growth during the second half of the year.