Danone Acquires WhiteWave, Boosting Presence in the U.S. Organics Market

WhiteWave Foods, which arguably helped make organic and non-GMO food and beverages mainstream, has announced that France’s Danone will acquire the company for an estimated $10.4 billion. The Denver-based food company company -- best known for its Silk brand of non-dairy beverages, Earthbound Farms salad mixes and Horizon organic milk -- offers Danone an opportunity to bolster its presence in North America and emerging markets. Danone already has a stake in the lucrative yogurt market with its Oikos and Stonyfield brands.

While organics are still a sliver of overall food sales, the fact is that the organics market has become lucrative and is growing rapidly. While it is difficult to measure the size of the organics market, the Organic Trade Association (OTA) estimated that organic sales reached $39.1 billion in 2014 — higher than the figures that the U.S. Department of Agriculture (USDA) predicted earlier this decade.

A sizable portion of those sales is due to WhiteWave. The company generated an estimated $4 billion in revenues last year. And unlike many companies that have gone public recently, WhiteWave has overall met the expectations of its investors since the company issued its IPO in 2012. The sales and stock price of the company have been on an upward trajectory since it became public, only to decline late last year as the U.S. stock market in general took a bearish turn. At press time, the company’s stock jumped 18 percent to over $56 a share on the announcement that Danone would purchase outstanding shares at a 24 percent premium. Some analysts suggested another buyer could swoop in and make an even larger per-share offer, as that premium is less than the typical 30 percent range at which most acquiring companies offer for a takeover bid.

Much of WhiteWave’s success comes from the fact that its products have been able to land on valuable shelf space at many of the largest American retailers, including Costco, Kroger, Target and Walmart. For Danone, the acquisition of WhiteWave gives the food giant an even larger presence on this side of the Atlantic, with the size of its North American portfolio almost doubling. And as the Wall Street Journal noted, this new company will generate a massive advertising machine, which last year combined to spend over $200 million in advertising — almost one-third more than Mondelez, the maker of Oreo cookies and Triscuit crackers.

The result is not only a larger gravy train for these combined companies, but will also give the overall organic, non-GMO and “healthy” food market more exposure, more publicity and more awareness. Some observers may bemoan the further consolidation within the food industry. But in this case, a larger Danone-WhiteWave entity could generate more competition and consumption of what in general are more healthful foods, which in the long run would only be a plus for this marketplace.

Image credit: Mike Mozart/Flickr