Danone defied geopolitical headwinds and weak consumer sentiment to deliver growth in Q1 FY26. Like-for-like sales increased 2.7% with price and volume/mix both positive.
In category terms, high-protein dairy, gut health products and functional beverages were stand-out performers and medical nutrition also showed resilience in the quarter.
The infant formula recall – which forced Danone to pull hundreds of formula batches due to an industry-wide ingredient contamination – weighed on sales, but CFO Jurgen Esser insisted its impact had been ‘exactly in line’ with expectations.
The company also hailed its acquisition of meal replacement major Huel while also noting its newly-formed JV with Arcor in Argentina would help unlock growth in one of the biggest dairy markets globally.
Appetite for functionality spreads beyond the West
High protein is “the number-one growth driver” at Danone, Esser said, adding that the trend is no longer a European and US-led trend but a global phenomenon.
Protein and gut health products were stand-out performers in the quarter, with functional waters also fuelling growth across Europe and APAC.
“The consumer preference for healthy food and hydration is rising everywhere around the world, and we are continuing to address this opportunity with several platforms contributing strongly to our growth,” Esser said.
“In dairy, high-protein yogurts continue to be the key contributor in all regions, from North America to Europe and Asia. Our more recent innovations, such as Skyr and Kefir, are flying off the shelves, and we are expanding them fast within and beyond Europe.”
“We continue to innovate in many segments and regions, and are particularly excited about new product launches under the Alpro brand in Europe, including the Meal To Go meal replacement solution,” he added. “Meal To Go was launched in Germany recently and is currently being rolled out to other European markets.”
Hydration products, including the new Volvic functional water range in Europe and Mizone in APAC, boosted Waters, which delivered a 2.3% sales growth in the quarter, ahead of the season.
Cold coffee: A bright spot in North America
After a soft fourth quarter, Danone’s North America sales edged up 1.5% as protein yogurt and coffee creamers began to recover from capacity and distribution constraints.
Danone’s International Delight creamers have struggled to regain shelf space following a product recall in late 2024, while demand for its high-protein yogurts has outstripped supply and impacted sales.
The company has since invested in capacity expansion, and the results are starting to show.
“Creamers are lapping the supply issues of Q1 2025,” Esser said, adding that several yogurt production lines “are coming online as we travel through the year.”
But there was one undisputed bright spot in its North America EDP sales: cold coffee brand STōK, which delivered double-digit growth in the period.
Infant formula recall weighs on performance
The global infant formula recall impacted Danone’s Q1 sales, particularly in EMEA, where the situation caused shelf disruptions and shook consumer confidence in the category. Product availability in the Middle East also took a hit, compounded by the geopolitical crisis in the region.
“It’s been really an exceptional situation as we faced the combined effects of a larger industry recall together with the Middle East supply chain disruption,” Esser said. “Our priority is on rebuilding the credibility of the category, and we are refocusing our investments to make this happen.
“We expect a progressive normalisation of the IMF business performance during the course of the year.”
On the flipside, medical nutrition delivered another strong quarter, with high‑single‑digit growth in the Americas and strong momentum in China.
Esser said Danone is seeing ‘good growth’ in the months following its Kate Farms acquisition in the US while in China, oral feeding solutions are contributing to a favourable performance.
