Danone to Drop Horizon Organic and Wallaby Brands Amid Ongoing Portfolio Review
Danone is stepping back from its U.S.-based premium organic dairy category. It sold off the segment of business to U.S. investment firm Platinum Equity.
The move is part of Danone’s ongoing Renew Danone strategy, which includes asset rotations and portfolio reviews to assess performance and shift focus to more profit-building investments.
The category included Danone’s Horizon Organic and Wallaby businesses, which accounted for 3% of the company’s global revenues. Danone reported the category had a “dilutive impact” on like-for-like sales growth and recurring operating margin.
As part of the deal, Danone maintains a non-consolidated minority stake in the businesses.
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Renew Danone first launched in March 2022, and this past October, CFO Juergen Esser reported the strategy was paying off, yielding expected results.
“You remember that delivering strong and balanced growth sits at the heart of the Renew Danone's business model,” Esser told investors during an October earnings call. “As our sector is shifting away from price-led growth, we are confident that moving forward we can demonstrate that we have categories, brands, and capabilities to deliver more balanced growth with volume, mix, and price contributing.”
Danone will continue focusing its North America efforts on strong portfolio performers, including brands like International Delight, Stoks, and Oikos within the Coffee Creations and Yogurt categories, which led growth in the third quarter.
In addition to “restaging” its portfolio, the company stated it will be focusing on restoring plant-based competitiveness in the new year.
“We are working on more structural plans to restage our portfolio and increase its relevance to consumers,” said Esser.
More About the Sell-Off
Within the Horizon Organic portfolio are milk, creamer, yogurt, cheese, and butter products. The organic brand was introduced across the U.S. in 1991. Wallaby, meanwhile, is an Australian-inspired, Greek-style yogurt.
“As part of our Renew Danone strategy, we committed to a portfolio review and asset rotation for businesses that fell outside our priority growth areas of focus to drive value creation. Today marks an important milestone in delivering this commitment while giving the Horizon Organic and Wallaby businesses the opportunity to thrive under new leadership,” said Antoine de Saint-Affrique, Danone’s CEO.
“This sale, once completed, will allow us to concentrate further on our current portfolio of strong, health-focused brands and reinvest in our growth priorities,” he added.
Platinum Equity managing director Adam Cooper stated that premium products, including organic brands, are driving growth in the U.S. dairy milk category, which is estimated at $16 billion (of a total $68 billion overall dairy category).
"Horizon Organic is an iconic name in dairy that is well recognized and beloved by consumers," said Platinum Equity co-president Louis Samson, in a statement. "The brand has earned a reputation for quality and innovation that is unmatched in the industry. We appreciate Danone's confidence in our ability to build on that legacy and support Horizon Organic's growth as a standalone company."
Platinum Equity has also acquired businesses from CPGs like Ball Corporation, Conagra, Johnson & Johnson, and more.
Mergers & Acquisitions
Danone joins other major consumer goods companies that are focusing on portfolio optimization.
For companies like Unilever, that means pruning and shifting to focus on “power brands” — the company recently sold off DTC male grooming brand, Dollar Shave Club, which the company purchased in 2016 for $1 billion. Additionally, Unilever purchased premium hair care brand K18 to expand the Unilever Prestige portfolio in high-growth premium spaces. This news followed the sale of Elida Beauty to private equity firm Yellow Wood Partners.
Meanwhile, others are focused on expansion. Chobani recently added ready-to-drink coffee company La Colombe to its portfolio in a $900 million-dollar deal this December. In November, Mars announced it would be acquiring high-end British chocolatier Hotel Chocolat in a $662 million-dollar deal.
