Danone enjoys sales boost

15 April 2011

PARIS: Danone, the French food group, performed strongly across all of its product lines in the first quarter of 2011, as sales rose 8.5% year-on-year.

Bottled water was the strongest category, with sales up 13% from 2009 thanks to the surge in demand witnessed by brands including Evian.

Baby food was up 11% year-on-year, while dairy grew 6.5%. Danone also received a boost in this last category from its merger deal with Unimilk, a Russian dairy firm.

By region, the firm's European sales grew 3.7% on a like-for-like basis, while Asia was up 18%.

Other territories rose 14.6%, with double-digit growth achieved in Mexico, Brazil and the US.

Danone's strong sales represent another signal that shoppers are shaking off the financial effects of the global economic downturn, which hit Europe and North America particularly hard.

But rising inflation could trim FMCG firms' profits over the months to come, due to higher product ingredient and transportation costs.

Franck Riboud, Danone's chairman, confirmed that the firm is sticking to its target of 6-8% like-for-like sales growth for 2011, despite the tough economic conditions.

"The competitive management of rising raw material prices will also be a priority for the rest of the year," he said.

"In an environment which remains complex our current sales trend allows us to stand by our targets."

Nestlé is to release its Q1 results on April 21. The firm recently said it expects like-for-like sales growth of 5-6% for 2011.

Data sourced from Danone/Bloomberg; additional content by Warc staff