WhiteWave Foods has said that M&A and expansion into new categories will form part of its long-term “plot for value creation”.
The Alpro owner, which yesterday (9 May) reaffirmed its full-year forecast and booked an underlying earnings increase, was listed on the NYSE in October as Dean Foods initiated the process of spinning the business off.
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Speaking on the firm’s earnings call, chief executive Gregg Engles suggested to analysts that following the completion of the Dean Foods transaction, it will be looking more strategically at M&A or expanding to other categories.
“We’ve been cautious about going on too much prior to the spin-off for some technical tax reasons and so we’ll be mindful of that out through 2013, but beyond that I think you should hope that you’ll see activity from us over time because I think we have an opportunity to build the value of our business in the M&A arena. So, we’ll be out there looking to expand our business with businesses are of similar character to what you see in our portfolio today.”
Engles said this form part of WhiteWave’s long-term “plot for value creation”.
“We think we have a really robust US platform that’s built around a great management team and great systems. We have a robust European platform that frankly would benefit from supporting a larger business in terms of the margins structure there and the G&A burden and we think that we have a great positioning as one of the leading players in these on trend categories to build our business into related categories with similar dynamics.”
Engles added that innovation is “core” to its strategy and the company will be focused on “long-term brand building initiatives” in 2013.
“We are positioned to benefit from the growing global adoption of products in our major categories. One example is our upcoming introduction of light offerings to the almond milk sub-category. This line will have the same great taste as original silk pure almond with a third pure calories.”
Engles said the firm will also be looking to build on the momentum it has achieved at Alpro, its European plant-based food and beverage segment, where sales were up 7% in the quarter. The company plans to focus on growing its plant-based beverage and yoghurt offerings this year, the CEO said. The firm will also be looking to add to its TruMoo flavoured milks range with the launch of Horizon DHA omega 3 in a single-serve package in the second quarter.
Separately, Engles acknowledged that the almond milk category is likely to see increased competition going forward, both in private label and branded, but appeared relatively unfazed by the prospect.
Bank of America Merrill Lynch analyst Ryan Oksenhendler said the category has seen growth but that WhiteWave’s almond milk category has a “solid margin structure”.
Engles said: “I think you will continue to see new players coming to these categories because they’re growth categories but here we sit with nearly 55% share in the Almond category and I think we’ve proven over time that we’re pretty good at being able to hold our share positions within the category because we’re committed to the category growth in building brand overall and that’s through great marketing great partnerships with our customers and as well as bringing innovation to the marketplace.
“There might be other players who com into marketplace and in some regards that can be benefit as we continue to grow the overall categories well. So we’re fully aware that others will play in our categories here but we’re accustomed to that across our entire business.”
