April 18, 2012

 

 

Increased demand by Americans for Greek-style yoghurt, and an end to a slide in Russian dairy takings, helped Danone stand by full-year targets, despite a warning over the European market.

 

The dairy giant said that a shake-up at its Russian-based Unimilk operation was "beginning to pay off", with the business achieving its first annual rise in sales volumes for more than a year in the January-to-March quarter.

 

"The impact of price hikes introduced in late 2010 and early 2011 has begun to taper off," Danone said.

 

In the US, sales of the group's Oikos Greek yoghurt brand more than doubled, supported by growing American interest in the product, and supercharged by advertising during the primetime Superbowl slot.

 

"Our Oikos brand continued to gain market share in the booming Greek yoghurt market," the company said.

 

American consumers are increasingly prizing Greek yoghurt for its high protein levels which sector leader Chobani, owned by privately-held Agro Farma, has also been promoting.

 

Indeed, according to Consumer Edge Research, Greek yogurt could account for up to one-half of the US yoghurt market.

 

And many commentators believe the product still has considerable room for expansion, given that American consumption of yoghurt is, at 5.5 kilogramme a year, at a fraction of European levels. Euromonitor predicts the market will be worth EUR9 billion (US$11.8 billion) by 2015.

 

The improved US, and Russian, results helped Danone raise sales of fresh dairy products by 3.8% to EUR2.85 billion (US$3.7 billion) during the quarter, despite a small decline in volumes.

 

"Europe fell back slightly during the quarter due to deteriorated conditions in southern countries," the group said, in comments which coincide with fresh concerns over Spain's debt levels.

 

Danone, based in France, warned that it expected consumer spending "to remain under pressure" in Western Europe, terming the region a "point of caution".

 

Nonetheless, boosted by its first-quarter dairy performance, and stronger growth in smaller waster, baby nutrition and medical nutrition divisions, the group stood by full-year expectations of a 5-7% rise in like-for-like sales.

 

"Danone is moving into 2012 with confidence," the company said.

 

The company's shares closed 2.9% higher at EUR53.08 (US$69.67) in Paris.