The Stress-Free Principle: What Companies Should Know and Do

Aug 4, 2016

Danone’s purchase of WhiteWave will grant it with America’a leading organic milk brand – Horizon Organic – but the company will have to sell Stonyfield, the number 1 brand in organic yogurt with 65% market share, per antitrust requirements.

Danone’s portfolio and position prior to the Whiteawave acquisition, CAGNY, Feb. 2017:

Analysts are betting on the immediate candidate – General Mills – to buy the $ 370 million Stonyfield brand. There are many justifications for that: General Mills is struggling with Yoplait; it does not manage to position it as a natural, BFY brand, and is focusing on growing the core – meaning first and foremost, dairy. General Mills already partnered with Organic Valley indicating that it wishes to expand its organic operations, and indeed, Dean Foods’ recent JV with Organic Valley might suggest that General Mills will have to find its own independent sourcing. But General Mills collaborations with Organic Valley was aimed at supporting the transition to organic farming for its Annie’s organic brand, so we believe that the company will not opt for Stonyfield.

We believe that the race will include, in addition to the many possible suitors, two major competitors: one is Kraft Heinz who tried and failed to re-merge with Mondelez, and we speculate that if might settle for Mondelez’s Philadelphia and other cheese brands and combine it with Stonyfield into a diverse US dairy portfolio.

The other possible candidate is – Nestle, which might find a strategic fit in the US premium, healthy dairy category. The company believes in the continued polarization of consumer goods markets, and in dairy that means organic.

Whoever ends up acquiring Stonyfield will find fierce competition from an emerging brand in the organic yogurt category: Wallaby. With Australia already becoming the “trendy geography” (in culture and “stress free” positioning), this premium wellness brand owned by WhiteWave and now Danone will surely win new customers and distribution points. Either way, the organic dairy market in the US will experience faster growth in the next few years than its 9% CAGR in 2013-2016, in volume if not value.

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