Danone expects to continue raising prices this year

Danone expects to continue raising prices this year after its steepest increases since the 1980s, mirroring industry competitors such as Nestlé and Unilever. The French company, which makes yoghurt and bottled water among other products, raised prices 8.7 per cent year on year, led by sharp increases in North America and Europe in the final months of 2022 — the biggest increases in four decades, the company said.

“We expect to perform additional pricing rounds if and when needed” in 2023, said chief financial officer Juergen Esser. He added that the increases implemented in the second half of last year should mean this year’s would be less acute. “We expect inflation to continue in 2023, but at a lower level than last year and sequentially decreasing.” The company said it passed on two-thirds of its inflation costs to retailers in 2022.

The decrease also follows a trend for Danone, where volumes have fallen every year for most of the past decade. Both Nestlé and Unilever reported a fall in volumes as they ratcheted up prices to the highest levels in decades as inflation surged. Sales, however, rose the most in a decade last year as Danone increased prices, but inflation and high costs weighed on its profit margin — particularly in its core dairy and plant-based category, which has underperformed for the better part of a decade. Sales were up 7.8 per cent during the period on a like for like basis, which strips out currency impacts, to €27.7bn, beating expectations.

Recurring operating profit grew slightly to €3.4bn for the year, but the company’s margin fell 1.54 percentage points to 12.2 per cent. Chief executive Antoine de Saint-Affrique is leading a turnround strategy at the business after taking over in 2021. The company is working to reduce the variety of products it sells to remain competitive.