Danone improves sales on "reset" yoghurt prices

By Guy Montague-Jones

- Last updated on GMT

Related tags: Danone, Brand, Brand management

Price cuts have helped Danone recover from a dip in dairy sales at the start of the year to report a healthy increase in fourth quarter sales.

Danone said the “substantial consumer price reductions” ​that formed part of its 2009 Reset Program helped the company deliver a 4.6 per cent rise in Q4 like-for-like sales in the dairy division.

This increase was driven by a 9.9 per cent increase in volumes that contrasted sharply with a volume reduction of 1 per cent recorded in the first quarter of the year.

Danone said the volume improvements brought market share increases in nearly all the markets in which the Reset Program was implemented.

All the major “resets” were implemented by the end of the year so Danone expects the negative price/mix effect to have troughed at -5.3 per cent in the fourth quarter.

Brand health

In terms of brands, Danone said Activia and Danacol continue to deliver strong performance, while Actimel has shown noticeable improvements.

Nutrition business specialist Julian Mellentin, in his recent publication, 10 Key Trends in Food, Nutrition and Health 2010, ​highlighted the impressive performance of Danone’s Activia brand.

In Italy, for example, Mellentin said IRI data indicates that the premium-priced digestive health brand defied the recession and achieved impressive sales growth of 19.5 per cent to €222.5m.

Danone said further brand development will be crucial moving forward as the company seeks to strengthen its competitive position.

Guidance

In what it assumes will be a challenging year with “difficult consumption patterns”,​ Danone expects to achieve like-for-like sales growth of at least 5 per cent for the overall business. In 2009, overall like-for-like sales rose 3.2 per cent to €14,982m.

Bernstein Research analyst Andrew Wood said the Danone guidance was cautious and suggested that management is “setting the bar low for over-delivery in 2010.”

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