PARIS -- A $10.4 billion acquisition that had some analysts scratching their heads could be a harbinger of where consumer preferences are going in the dairy and coffee categories.
Last week, French dairy company Danone agreed to a $10.4 billion acquisition of WhiteWave Foods—known for its coffee creamers and equipment in convenience stores—in a move described as “the biggest deal to date in the natural and organic foods industry,” as reported by Fortune.
WhiteWave’s acquisition brings together a major dairy company and the maker of Horizon Organics and Silk brand plant-based milks. In a partnership that at first glance seems “diametrically opposed,” according to Fortune, the acquisition helps Danone simultaneously gain traction in the flourishing plant-based milk industry and Horizon’s organic milk sector.
A closer look at the deal uncovers some of the ways in which today’s consumers seem to have contrasting ideas about better-for-you milk products; both organic milks and plant-based alternatives appear to fit into how many people are fluidly defining health and wellness. Rather than one category cannibalizing the other, WhiteWave’s brands have been capturing share of wallet from consumers on both sides.
Danone likely recognizes the burgeoning two-fold growth opportunity here, as plant-based milk and yogurt products are growing at an 11% compounded annual growth rate in the United States, while the natural and organic milk category is growing by 8%. Danone’s U.S. presence includes yogurt brands such as Dannon, Dannon Light & Fit, Oikos, Danimals and Activia.
The other piece of the puzzle pulls in WhiteWave’s competitive niche in the convenience-store arena. For Danone, the advantage of buying Denver-based WhiteWave allows it further entry into the convenience segment beyond the refrigerated case. Branding itself as “The Coffee Bar Experts,” WhiteWave’s coffee-creamer products and equipment are designed to help c-stores optimize coffee bars as a customer draw.
Technomic data backs up the ability of coffee to attract traffic to convenience stores. Research shows that 75% of consumers visit the foodservice areas of c-stores for regular coffee in the morning. Two out of three (64%) visit specifically for a specialty coffee during breakfast, and 43% stop in for a flavored coffee as a snack during the day.
Further, Technomic’s most recent beverage data shows that 90% of the top convenience stores offer cappuccino, while specialty coffees such as macchiatos have increased their presence at leading c-stores by 25% since 2014. WhiteWave’s position as a big player in the coffee-customization game helps Danone leverage flavor and coffee trends within a new growth channel.
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