Numico, the baby food and clinical nutrition business, will help French food giant Danone withstand the economic downturn, a leading industry analyst said today (11 February).

Danone moved into medical nutrition and baby food in 2007 with the EUR12.3bn (US$15.9bn) takeover of Dutch firm Royal Numico, which included the Cow & Gate and Milupa brands.

Danone today reported bumper sales growth from both parts of the business in 2008. Its baby nutrition business posted a 17% rise in revenue on a like-for-like basis to EUR2.8bn, just shy of the EUR2.9bn in sales generated by Danone’s bottled water business.

The company’s medical nutrition business contributed sales of EUR854m, a rise of 12.7% on the year.

Sales from Danone’s two larger businesses, dairy and bottled waters, grew by 7.7% and 1.9% respectively.

Cedric Lecable, an analyst at Kepler Capital Markets in Paris, said Danone’s moves into baby food and clinical nutrition set the business apart from some of its peers in the food industry.

“Numico is a clear differentiator,” Lecable told just-food. “Danone has more exposure to these niches than some of the other food players.”

Lecable said Numico now accounts for 30% of Danone’s EBIT and he forecast further growth from the business in 2009. “In baby food, there is no serious private-label alternative,” he said.

Looking at Danone’s 2008 results, rising baby food sales helped boost annual profits. Danone’s underlying net income rose 15% to EUR1.31bn. Turnover rose 8.4% on a like-for-like basis to EUR15.22bn. Trading operating income climbed 12.3% to EUR2.27bn.

During the fourth quarter of the year, sales growth slowed, climbing 6% on a like-for-like basis. Fresh dairy volumes dipped 0.3% but rose 3.8% in value terms. Danone’s bottled water business saw sales fall 1.5% due to falling volumes in western Europe.

Lecable argued that Danone called look to sell its bottled water businesses in western Europe.

“My perception is that if they could dispose of the Western European bottled water business they would probably do it,” Lecable said.

“The problem is finding an acquirer. The big US guys would not want it in my view. They want to be in fast-growing niches to offset the structural decline of cola in the US.”