Danone sells two brands, cleaning up its portfolio completes

After announcing its desire to divest almost a year ago, Danone completed this weekend the sale of two of its two brands of organic dairy products in the United States, Horizon Organic and Wallaby. Known across the Atlantic for their coffee creams, yogurts, cheese and butter, these will be sold to the American fund Platinum Equity, which manages 47 billion euros in assets, for an undisclosed amount, the group announced Tuesday morning . With just over 800 million euros in turnover (i.e. 3% of Danone's total turnover), these two brands were inherited from Danone's acquisition at great expense in 2017 of the plant products giant and WhiteWave organic.

But in a less buoyant context for basic dairy products (milk, yogurt, etc.), even labeled organic, they struggled to achieve the group's profitability rates. Enough to place them high on the list of non-strategic assets to be sold. This was one of the major levers of recovery defined by Antoine de Saint-Affrique, the general director of Danone during the presentation of his strategic plan in March 2022. The latter estimated the scope of these activities at around 1 billion euros. underperforming dairy assets.

“Horizon Organic and Wallaby are not part of Danone's priority growth segments,” explained at the time the boss of the giant known for its Danette, Danone, Alpro, Activia and Actimel brands. “This sale (...) will allow us to focus more on our portfolio of strong brands, centered around health, and to reinvest in our priority growth segments,” added the manager on Tuesday.

Even if the group does not prohibit other sales of non-strategic assets – or transfers of opportunities – this new step allows it to more or less achieve its objective of pruning the 10% of its portfolio composed of non-priority activities. Once the American sale is finalized, it will be at 9%.

Since the arrival of its new captain a little over two years ago, Danone has partially withdrawn from its waters in Argentina and 18 months ago definitively cut its capital ties with the Chinese dairy products specialist, Mengniu.

A few months later in the fall of 2022, Danone announced that it wanted to sell its dairy and plant-based assets in Russia (5% of its turnover). An exit transformed into a headache after the forced nationalization last July by Moscow of the French group's Russian assets. At the beginning of December, the group finally entered into exclusive negotiations with the Italian Ferrero to sell its Michel biscuit brand to it.

Coupled with the revival of innovation and the focus on operations, this cleaning of the portfolio has started to bear fruit. Since the fall, the volumes of Danone's dairy and plant-based products (53% of its activity) have been slowly improving, limiting their fall to between 2 and 3% over one year. And the group, helped by past price increases to offset inflation in its costs, has returned to growth for seven quarters.

Well underway in this path of recovery for which it gave itself until 2024-2025, the group could now be more aggressive on acquisitions and profitable growth. A point awaited by the markets for the year just started, even if investors have already welcomed the return to better form of Danone with an increase in the stock of almost 20% in 2023. These first milestones laid, Antoine de Saint-Affrique will detail in the spring the preferred areas or areas of external growth, and the avenues for accelerating the group's recovery.

Almost since his arrival, the architect of Danone's silent revolution has made little secret of his ambitions for the group in health or in regions where it remains under-represented such as Africa or India. In April, Danone purchased a small home care and nutrition business in Poland (Promedica). Before investing 50 million euros, still in Poland, in its local medical nutrition factory in Opole. Perhaps the prelude to a more indulgent year 2024 after the slimming treatment of the last two years.