DANONE said customers are back buying more expensive branded goods as cost-of-living pressures ease and some Asian markets recover.
The French yogurt maker said like-for-like sales increased 4 per cent in the second quarter, compared with 3.8 per cent expected by analysts. Almost three quarters came from greater volumes and consumers trading up to more expensive formats, rather than higher prices.
Danone reaffirmed like-for-like sales growth guidance of between 3 per cent and 5 per cent for the year, with a moderate improvement in operating margin. The quarterly growth rate was the lowest since 2021 as pricing wore off.
China, Japan, Australia and New Zealand grew faster than other regions, with a more than a 8 per cent increase in like-for-like sales, fuelled by specialised nutrition, products like yogurt in Japan and the Mizone vitamin drink’s recovery in China.
Specialised nutrition, which includes ranges for cancer patients where Danone is expanding, was the company’s fastest-growing unit – and is set to be a big part of the next stage of its recovery effort.
Danone is just one global branded goods giant trying to coax back stretched customers, after a prolonged period of high inflation and lending rates forced households to cut back – often by switching to cheaper supermarket labels. It bucked a trend set by rivals like Nestle, PepsiCo and Unilever, who missed top line estimates for the quarter on weak consumer demand in some countries including the US. BLOOMBERG
