Coronavirus (COVID-19): Danone spotlights long term strategy as it reports strong Q1 results

Jon Wright
Head of Insight - RA EMEA
@RetailAnalysis

Date : 23 April 2020

Announcing its first quarter results, which were ‘stronger than [it] had anticipated’ Danone underlined why it believed its long term One Planet. One Health. strategy remained ‘so relevant, urgent and meaningful’.

Shift in consumption patterns affected operations

Danone highlighted the several shifts its operations have had to deal with during the first quarter. Initially it said had seen ‘unprecented swings in weekly demand accentuated by stocking patterns in the first weeks. The biggest effects it saw was the move ‘from out-of-home to at-home food consumption’ and a shift in ‘preferences to larger pack sizes’. The impact of the widespread closure of the consumer foodservice channel was mainly felt by the company’s Waters division, where around 40% of its sales are normally consumed away from home.

Essential dairy and plant-based products benefit from at home consumption

Danone said its essential dairy and plant-based brands had benefited from ‘the triple effect of low exposure to out-of-home channels, growing at-home food consumption in March and some pantry loading benefits in Europe and North America’. Due to the changing demand patterns it said it had refocused on driving sales by concentrating on large formats and its most in-demand SKUs.

Importance of ecommerce highlighted for other categories

In its specialised nutrition and waters divisions, Danone underlined the importance of ecommerce to their continued strength and sales growth. In specialised nutrition it said its Aptamil brand, in China, had benefited from ‘its strong position in fast-growing e-commerce’, while in waters, in Europe, it had seen a boost from ‘some pantry loading on plain waters and large formats sold in Modern Trade and through ecommerce’.

2020 outlook withdrawn, but recommits to long term vision

Danone said it was withdrawing its full-year guidance ‘given lack of visibility related to COVID-19’, noting it believed ‘both global supply and demand to be extraordinarily volatile and unpredictable for the rest of the year’. Despite this, the company said it remained committed to its investment in the climate action of its brands due to the ‘ greater recognition from consumers for climate-proofing actions’.

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