just On Call - Danone CEO details factors for waters growth
Danone saw sales growth in its waters division of 13.3% in the first quarter
Danone has said that the strong performance of its waters division in the first quarter was driven by growth in Latin America, Japan and the emerging economies.
The food and drinks giant recorded an increase in first-quarter sales, driven by volume growth in emerging markets. For the three months to the end of March, Danone saw sales growth in its waters division of 13.3% to EUR718m (US$1.04bn), it reported today (14 April).
Speaking on the firm's earnings call today, Danone's chairman and CEO, Franck Riboud, said that the performance of its waters division "can be qualified as excellent". He added that there were three contributing elements to the growth of the business.
"Comparisons have been a help in this case, and the weather conditions in Latin America have been much better than they were a year ago," Riboud said. "The second element in this improvement in water is in emerging markets, in what we call the aqua drinks. These products obviously have a higher value portfolio than other products and have been contributing to the acceleration of the growth of water. You can see a step up in the volumes of water drinks."
Riboud said an adjustment of inventory in Japan also helped growth, where last year Danone had recorded a negative performance for water.
The CEO said the group will take some pricing in water this year, which it has not yet done to date.
"We have seen the inflation of PET costs, and will see the shift to more value from less volume," Riboud said.
Richard Hall is the chairman and founder of Zenith International, a food and drinks consultancy with around 1,000 clients in 50 countries. Here, we ask Hall what he expects the main influences will be...
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