To some in the financial community, Danone‘s move to buy US frozen-yoghurt maker YoCream International this week may not – to use the jargon – have been “material” enough to warrant too much attention. However, the US$103m deal remains another significant sign of the French food giant’s moves to diversify its business.
The acquisition of YoCream gives Danone an entry into the buoyant frozen-yoghurt category in the US and gives the company access to the US firm’s out-of-home distribution network. YoCream does sell into US convenience stores but the bulk of its business in the foodservice channel.
Analysts at CM-CIC Securities in Paris said Danone’s move for YoCream was a sensible one. “Danone is shoring up its presence in dairy products on a high value-added segment – US distribution networks outside the home,” the analysts wrote in a note to investors. “Granted, the operation is not on a large scale for Danone, but it does make sound strategic sense.”
Danone has long set its sights on boosting its presence in the US yoghurt sector, where per capita consumption lags markets in Europe. Last month, speaking to South African newspaper Business Day, CEO Franck Riboud described the US as “an emerging country” in terms of yoghurt.
More broadly, Riboud said Danone was looking to increase its total sales (not just in yoghurt) in the US from $1bn to $3bn over the next two years without large acquisitions.
Aside from its US ambitions, Danone has, in recent months, made other deals that demonstrate a determination to expand its business into high-margin categories and emerging markets.
In March, Danone announced a venture with US produce giant Chiquita Brands International to market fruit-based drinks in Europe. Danone bought a 51% stake in the venture and took management control of the business.
In June, Danone announced another venture. This time, Danone said it would merge its fresh dairy business in Russia with local firm Unimilk to create a company with annual sales of EUR1.5bn (US$1.32bn) and that it would span Russia, Ukraine, Kazakhstan and Belarus.
And now, Danone has rounded off the year with the acquisition of YoCream, a deal that may not have grabbed some analysts’ attention, but one that indicates the company’s continued pragmatism overseas.