Plant-based dairy is undeniably experiencing remarkable growth. SPINS data shows that sales in this segment surged by 20% in 2020, a significant increase compared to the previous year. Nearly 40% of U.S. households purchased plant-based milk last year, but Danone sees great potential in the remaining 60% of households. “While we may view plant-based beverages as well-established, there are still 60% of consumers who have not yet entered this category,” Grant stated during the earnings call. “As the leader in this sector, we see it as a prime opportunity to enhance the overall growth of the segment and assert our leadership.”
To attract these consumers, the company recognizes that mastering taste is essential. A 2018 Mintel survey revealed that nearly two-thirds of U.S. adults prioritize taste over health when choosing plant-based proteins. Although Grant did not elaborate on the new taste and texture innovations or their timeline for market introduction, he emphasized Danone’s multifaceted strategy to capture a larger share of the broader plant-based market.
Danone’s “beverage acceleration strategy” is built on several key pillars, one of which is maintaining the Silk brand’s modern appeal. In April, Danone launched the “Milk of the Land” advertising campaign for its Silk line to clarify the almond milk production process. The company views almond milk, which holds the largest share of the plant-based dairy market, as a gateway for new consumers. “We will continue to actively provide differentiating factors in this segment, and you can expect more developments in the U.S. later this year and into 2022,” Grant noted.
The company is also focused on remaining competitive in the oat segment, facing strong competition from Oatly, which recently went public. However, its fortunes may have changed after accusations from a short seller about overstating revenue and margins. In the soy category, Danone aims to reposition the segment with an emphasis on nutrition, including ingredients like calcium citrate with vitamin K2. The company plans to explore adjacent markets in yogurt, ice cream, cheese, and creamers, which currently account for about one-third of its plant-based revenue. In February, Danone acquired Follow Your Heart, a leader in dairy-free cheeses, spreads, and dressings, and in January, its So Delicious brand expanded into the plant-based cheese sector.
“These segments are among the fastest-growing, with emerging scale and, in some cases, similar or larger addressable markets compared to milk,” Grant stated. “With Silk, Alpro, So Delicious, and now Follow Your Heart, we hold leadership positions that will enable continued growth and acceleration.”
A “taste-first” approach will further support Danone’s 2018 goal of tripling its plant-based sales by 2025. The company intends to launch a significant reboot in North America by the end of 2021, which Grant believes will have a substantial impact as they move into 2022.