Alongside our daily news coverage, features and interviews, the Just Food team sifts through data sets to bring you a round-up of the week in numbers.
This week, Danone issued its first-quarter financial results and revealed challenges in pushing through price increases in Europe, which resulted in a loss of market share as the world’s second-largest dairy company stood “firm” in its negotiations.
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Meanwhile, Swiss counterpart Emmi inked a deal for a majority stake in a dairy business in Brazil, a country that falls within the company’s second-largest business region of the Americas.
Another food industry heavyweight, Nestlé, came under fire over accusations of “double standards” in adding sugar to baby-milk formulas and cereals in emerging markets, claims that were refuted by the Cerelac brand owner.
Over in Finland, Fazer Group bemoaned the proposed increase in VAT for confectionery products, a government measure that singled out the category from other food stuffs just as volume growth in sweets stagnates.
In South Africa, plant-based meats won a reprieve as a court ruling cleared the ground for the use of “meaty” terms in an alternative-protein category that remains relatively small in value in the country.
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By GlobalDataDanone price talks
Danone initiated single-digit pricing in the first quarter across all geographic zones but met with obstacles in negotiations with European retailers.
The impact was felt in the France-based dairy major’s largest business area – essential dairy and plant-based products (EDP) – resulting in a loss in volumes.
Finance chief Juergen Esser said Danone had been “selective” in its price increases in Europe but experienced “market share pressure” in March and April as price talks broke down.
“It is important for us to stay firm in those conversations to build a sales base for the remainder of the year even if it has cost us a few basis points of market share in March. Negotiations are mostly done, and we are, as we speak, going back to business as usual,” Esser said.
Danone’s EDP business for the company as a whole posted LFL growth of 3% with sales of €3.47bn ($3.69bn). Volume/mix was a positive 0.8%.
However, the pace in Europe EDP slowed considerably.
“The good underlying performance is not entirely reflected in our net sales numbers as we got exposed over the last weeks of the quarter to some shipment disruption in the frame of our price negotiations in retail,” Esser explained.
Emmi expands in Brazil
Verde Campo was added to Emmi’s stable of brands in Brazil as the Swiss company took a majority stake in the business through its local subsidiary Laticínios Porto Alegre.
Emmi said the 70% stake in Verde Campo strengthens its position in a “strategic” market.
The Americas were the dairy group’s second-largest geographical business division last year, which as well as the US and Canada, includes Brazil, Chile and Mexico, along with Tunisia and Spain.
“This arrangement affirms Emmi’s conviction that the company can take Verde Campo to sustainable, profitable growth,” the Switzerland-listed business said.
“In line with its aim of continual portfolio transformation, Verde Campo will complement Emmi’s position in Brazil with a strong brand and focus on functionality.”
Based in Lavras in Minas Gerais state, Verde Campo supplies its own brand of dairy products such as probiotic and lactose-free yogurts.
“In line with its aim of continual portfolio transformation, Verde Campo will complement Emmi’s position in Brazil with a strong brand and focus on functionality,” Emmi said.
Nestle in firing line over sugar in emerging markets
Zurich-based NGO Public Eye and the International Baby Food Action Network (IBFAN) accused Nestlé of “double standards” between less affluent countries and richer nations when it comes to added sugar in infant products.
Based on an analysis of 150 baby-milk powders and cereals sold by Nestlé in “lower-income countries”, the two organisations jointly claimed “almost all” Cerelac products examined contained added sugar, amounting to an average of almost four grams per serving. The highest was detected in the Philippines at 7.3 grams.
For Nido powdered milks produced by Nestlé, the study identified almost two grams of added sugar per serving in “most” of the products, the highest being a product analysed in Panama at 5.3 grams.
“In Switzerland and in Nestlé’s main European markets, such products are sold without added sugar,” the report – ‘How Nestlé gets children hooked on sugar in lower-income countries’ – suggested.
“Whereas Nestlé recommends publicly to avoid baby foods that contain added sugar, it takes advantage of the weakness of existing regulations to continue selling such products in lower-income countries.”
Reacting to the report, Nestlé said in a statement provided to Just Food: “We apply the same nutrition, health and wellness principles everywhere.
“Baby food is a highly regulated category. Everywhere we operate, our portfolio complies with local regulations or international standards, including labelling requirements and thresholds on carbohydrate content that encompasses sugars.
“Over the past decade, Nestlé has reduced by 11% the total amount of added sugars in our infant cereals portfolio worldwide.”
Public Eye and IBFN added: “The paediatricians and child nutrition experts interviewed by Public Eye denounce a double standard that is unjustifiable and problematic from an ethical and public-health perspective, particularly in view of the obesity epidemic affecting low-income countries.”
Nestlé said: “In a few countries in Europe, consumers can find infant-cereal alternatives with zero added sugar in addition to the regular recipes available with added sugar.”
Fazer hits out at tax plan
The Finnish group kicked out at a government proposal to raise VAT on confectionery, warning consumers might switch to competitor brands.
Under a fiscal plan for 2025-2028, the administration of Prime Minister Petteri Orpo “has agreed” to increase the “general” value-added tax rate from 24% to 25.5%, according to an official statement.
The VAT on confectionery – sweets and chocolate – will be raised from the current 14% into line with the general rate of 25.5% as part of a raft of budget measures described as “decisions that will improve the sustainability of public finances and create conditions for reversing the trend in indebtedness”.
Fazer said the proposal to increase VAT on sweets and chocolate was a “great concern”.
Helsinki-headquartered Fazer suggested other “foodstuffs” are not included in the VAT increase proposal, adding the plan “would treat product categories unequally and possibly steer confectionery consumption towards foreign products and other categories”.
Fazer’s president and CEO Christoph Vitzthum said: “We are very surprised by this government proposal. The volatility and unpredictability of the political operating environment in Finland as well as regulation, which treats different actors unequally, is very worrying."
South Africa meat-free win
The Johannesburg High Court overturned a government decision to seize all plant-based meat alternatives from shelves, a ruling that allows “meaty” names like sausage, burger and steak to be used for faux meat.
In 2022, South Africa’s Department of Agriculture, Land Reform and Rural Development (DALRRD) moved to ban the use of such words. However, the alt-meat industry then won a court reprieve from plans to seize the items, pending the full hearing of an appeal.
The court’s new ruling was welcomed by Donovan Will, director of the South African office of NGO ProVeg.
“Regulating a new industry can be complicated and challenging, particularly as it slots into the food and agriculture sector but, given the undeniable benefits, ProVeg sees this as an opportunity to leverage our international expertise and work with businesses and the government to ensure a successful and sensible regulation of these products and grow the industry as a bedrock for healthier alternatives and a job provider.”
According to ProVeg, alt-meat manufacturers are still not allowed to name plant-based alternatives “biltong” (a venison-based beef jerky) nor "boerewors” (a type of sausage that originated in South Africa).
The NGO said the word "meat" is allowed to be used as long as it is clear the product is a meat analog and plant-based.
