Healthy products breed healthy sales for Danone

The French dairy, beverage and biscuits group said fresh dairy and strong beverage innovation in Asia led it to an eight per cent rise in net sales to €14bn for 2006. The results put Danone in a bullish mood this week and serve as a reminder to the industry as to what a portfolio of strong, health-focused brands can do in the current consumer climate. "Growth is driven by our clear strategic focus on innovation, our strength in healthy foods, our strong market positions and by enhancing our geographical footprint in existing and new territories,"​ said chairman Franck Riboud. Established probiotic brands Activia and Actimel joined two other fresh dairy products, Danonino and Vitalinea, in growing by more than 15 per cent during 2006. Latin America displayed its ability to rival Asia as an emerging market in some areas, with Danone's dairy sales up more than 20 per cent there. North America, meanwhile, jumped forward thanks to the launch of Activia early in the year. In beverages, Asia provided the setting for an "exceptional performance from new product innovation"​, the firm said. This included the Nutri-Express smoothie launched in China. Danone's beverages division increased sales by 14 per cent overall, although profitability remained a concern. High PET and sugar prices sent margins down, but the slump was offset by gains in dairy. France also remained a troublesome market for Danone's bottled water brands, which include Evian and Volvic. The group said it had pulled back ground with new products, such as its Taillefine functional tea drink. The biscuits division had a quieter year than beverages and dairy, with growth at a more modest three per cent. Spain and Italy appeared to keep the sector positive after declines in Eastern Europe.