Business Irish

Monday 22 October 2018

China's baby boom lifts Danone, and Irish dairy

Cecile Cabanis, chief financial officer of French food group Danone, and chief executive Emmanuel Faber at a news conference to present the company’s 2017 annual results in Paris, France
Cecile Cabanis, chief financial officer of French food group Danone, and chief executive Emmanuel Faber at a news conference to present the company’s 2017 annual results in Paris, France

Corinne Gretler

Danone is leading the race to feed China's babies, gaining ground against Nestle and Reckitt Benckiser Group Plc and offsetting a slump in its yogurt business.

Sales of infant nutrition climbed almost 10pc last year, the Paris-based company said yesterday, including from its Irish infant nutritian production facility in Wexford which buys from Irish dairy producers.

That was fueled by growth in China and the rest of Asia, where Danone has doubled its market share in baby food in the past five years as it increasingly cuts out the middleman by establishing direct sales to consumers.

"Danone continues to navigate the rapid channel shifts to e-commerce and mom-and-baby stores in China more successfully than peers," wrote Alicia Forry, an analyst at Investec. Sales in that market rose 30pc in the fourth quarter.

Demand for infant formula has ramped up in Asia's largest economy, which ended its one-child policy around 2016. Danone's strong push into e-commerce has helped the company increase its global baby-food market share to 12.3pc in 2017, gaining for a fifth year, according to Euromonitor.

Nestle, the leader with 20.9pc, said on Thursday its infant formula sales growth in China was soft.

Danone shares rose as much as 1.5pc in early trading yesterday. Last year's boom was buoyed by strong birth rates in China, though that's slowing down, chief financial officer Cecile Cabanis said on a call with reporters. The peak in births was in the second half of 2016, Danone said. (Bloomberg)

Irish Independent

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