DENVER — The WhiteWave Foods Co. has “robust” innovation planned for its plant-based food and beverage brands in the coming year. The company’s plant-based businesses, which include Silk, So Delicious and Vega, grew 41% in the recent quarter.
|Gregg Engles, chairman and c.e.o. of WhiteWave|
“The plant-based beverage category is a $1.3 billion category,” said Gregg Engles, chairman and chief executive officer, during a Nov. 9 earnings call with financial analysts. “It’s growing today in the mid-single digits as a category. We are bringing meaningful innovation to that category in 2016, but we are also having a lot of success growing our yogurts and our frozen desserts business and starting to bring to reality this concept that we’ve been talking about for quite some time of reframing this category beyond just beverages to other aspects of the category…
“You have to innovate and you have to reframe the categories in order to sustain growth and we feel very good about our plot in that regard.”
Such new products as Silk cashew milk and soy-based yogurts contributed to strong quarterly results. WhiteWave’s net income for the third quarter ended Sept. 30 advanced 22% to $50 million, equal to 29c per share on the common stock, which compared with $41 million, or 23c per share, for the prior-year period. Total net sales increased 17% to a record $1,004 million from $857 million the year before, driven by growth across all segments and contributions from acquisitions. On a constant currency basis, adjusted net sales increased 20% over the year-ago quarter.
Beyond innovation, WhiteWave plans to expand distribution of its plant-based products to international markets.
“We are relatively early on in that effort, and there are opportunities for greater levels of traction there,” Mr. Engles said. “So there’s just lots of ways to grow these brands and these products when you have a basically receptive consumer base to moving towards new things and those are channels, they are geographies, they are adjacencies to our core categories.”
The company also is evaluating opportunities to enter additional channels by formulating products for away-from-home consumption.
“This move into the immediately consumable beverage in the away-from-home market requires some slightly different manufacturing capabilities than we have, so we are going to have to build those up,” Mr. Engles said. “Those products really want to be aseptic so they can be distributed in a non-refrigerated way. You can make it work refrigerated, but it’s a lot more challenging. So we are sorting through a lot of those things behind the scenes in terms of how we get the right product format and formulation available to go to those marketplaces, but … it is an interesting area of potential growth and one that we are working on.”
During the quarter, WhiteWave’s Americas Foods and Beverages segment, which includes plant-based foods and beverages, coffee creamers and beverages, and premium dairy, posted net sales of $723 million, an increase of 23% over the prior year, driven by volume growth and aided by pricing benefits within the premium dairy platform. Operating income for the segment increased 26% to $83 million.
Net sales for the Americas Fresh Foods segment, which includes the Earthbound Farm brand, climbed 4% to $147 million, led by high single-digit growth in organic packaged salads and strong growth in frozen products, partially offset by a decline in fresh fruits, as the company continued to rationalize this lower-margin business. Operating income declined 24% to $12 million, due to higher farming and other input costs related to short-term increases in crop inventories.
For the Europe Foods and Beverages segment, which includes plant-based foods and beverages sold primarily under the Alpro brand, net sales increased 4% on a reported basis to $135 million and 20% on a constant-currency basis to $155 million, driven by volume growth across major product lines. Operating income for the segment advanced 39% to $19 million.
During the quarter, the company closed on its acquisitions of Vega plant-based nutrition products and Wallaby organic yogurt.
“Both brands are still nascent with opportunities for further innovation, distribution and growth,” Mr. Engles said. “We remain focused on growing our core brands and categories while strategically adding more.”For the full year, WhiteWave expects to deliver net sales growth of approximately 16% on a constant-currency basis and 13% on a reported basis.