French dairy company Danone said yesterday (12 April) that its acquisition of natural food company WhiteWave was final. The announcement comes less than two weeks after Danone revealed it was putting its US Stonyfield organic dairy brand up for sale after striking an agreement with the Department of Justice to do so in exchange for gaining its approval for the WhiteWave deal. just-food’s US columnist Victor Martino looks at the would-be acquirers for Stonyfield.
Danone first partnered with Stonyfield in 2001, when it took a 40% stake in the Colorado-based organic dairy foods company. In 2004 Danone upped its stake in Stonyfield to 80%, acquiring the entire company in 2014.
Stonyfield, which had US$370m in annual sales, was one of the first organic mega-brands in the US, and under the leadership of former CEO and now board chairman Gary Hirshberg, has achieved iconic status in US natural and organic food industry circles. A consensus of analysts estimates puts Danone’s price tag for Stonyfield a bit north of $700m.
Danone’s forced decision (by the Department of Justice) has tongues wagging in the industry globally: ‘Who’s going to buy Stonyfield?’
Who indeed. Let’s analyise the players and the terrain.
First off, buying Stonyfield would be a dream deal for General Mills, in my analysis and opinion. ‘Big G’ is losing ground to Chobani in its prime North American market. Chobani just-recently surpassed General Mills’ Yoplait as the number two brand in North America. According to Nielsen, Chobani has a 19.8% share to Yoplait’s 19%. Danon is tops in market share with 34%. Chobani owns the Greek yogurt category with a 37.6% share, according to Nielsen.
But dreams, assuming General Mills is having any about a potential Stonyfield acquisition, aren’t always enough when it comes to deals. The problem with a General Mills-Danone/Stonyfield deal is two-fold: Danone likely won’t want to sell the iconic organic brand to its chief competitor – the same probably would apply if Chobani offered to buy Stonyfield – and should it want to and do so the US Justice Department might oppose it on the grounds it would concentrate to much category market share in the hands of General Mills.
Now What?
The two big food companies, besides General Mills, that can benefit most from Stonyfield are Kelloggs and Campbell Soup Company, in my analysis.
Kellogg needs a lift in the breakfast foods category because of souring cereal sales. Yogurt is trumping cereal for breakfast. Stonyfield could fit the bill. It’s organic too boot. Good synergy with Kelloggs’ Kashi brand.
For Campbell’s, Stonyfield fits very well into CEO Denise Morrison’s new “Fresh” focus, which is one of five pillars of her new grand strategy for the company. Stonyfield also fits well with Campbell’s focus on organics with its Bolthouse Farms brand, which it’s growing rapidly. The brand includes numerous refrigerated food and beverage product lines. Campbell’s also recently introduced a yogurt-based mayonnaise brand and is looking at using yogurt as the primary ingredient in other new food and drink products.
Dean Foods is another company that would benefit from acquiring Stonyfield, and in many ways actually needs the brand, or one similar to it. Dean Foods owned WhiteWave, which it spun off into a separate company via an IPO in 2012. Doing so was a big mistake – and the company’s performance since suggests I’m correct.
Dean Foods recently realised it needed to get back into the organic segment in a serious way, so in November 2016 it inked a joint-venture with billion dollar dairy cooperative Organic Valley. The joint-venture involves sales, distribution and brand-building. Dean Foods’ CEO Gregg Tanner said when the joint-venture was announced that it would serve as a growth platform for both companies in the area of developing organic dairy product brands. Stoneyfield would be a strong and valuable plank for Dean Foods in constructing that platform.
Also look for Hormel, Hain-Celestial and Pinnacle Foods as possible buyers of Stonyfield, although I see fewer benefits to these companies in a deal compared to the others.
PepsiCo, Coca-Cola and Canadian dairy giants Saputo and Agropur are also potential buyers. Don’t rule out global dairy products’ companies Lactalis, Friesland Campina and Fronterra either.
I’ll conclude by offering a wildcard possibility, which is that former Stonyfield CEO and current chairman Gary Hirshberg could put together a deal with pals in the organic foods industry and a private equity firm or two and buy the dairy brand he led to its now iconic status back from Danone. Trust me, stranger things have happened in the organic products’ industry.
[Source:- just-food]
