Dannon Co., the U.S. unit of Groupe Danone SA, plans to double the amount of yogurt it makes over three years as demand for the dairy product surges in the country.
Danone, the world's largest yogurt maker, will expand factories in Minster, Ohio, and West Jordan, Utah, Dannon Chief Executive Officer Juan Carlos Dalto said in a Feb. 5 telephone interview from the unit's White Plains, N.Y., head office. He said Danone aims to double U.S. sales over the next five years.
"The U.S. is a land of opportunity for the company," Dalto said. "It's one of Danone's new frontiers."
Activia, a digestion-enhancing yogurt, has sold almost three times more in the U.S. than management forecast since it was introduced there in January 2006. Paris-based Danone has targeted health-conscious consumers worldwide with products containing live bacteria such as Activia, its fastest-growing brand, and immunity-boosting milk drink Actimel.
The yogurt maker will add to its 1,200 U.S. employees as it extends the Minster and West Jordan plants, Dalto said, without giving details. Dannon has a third plant in Fort Worth, Texas. Dalto declined to disclose last year's production or revenue.
Americans on average eat about 4 kilograms of yogurt each a year, almost 10 times less than Europeans, according to Danone. The growth of Activia, which generated $130 million in revenue last year, encouraged the company to introduce three new products containing health-enhancing bacteria at the start of this year, Dalto said.
"In America, yogurt is not as closely linked to health as it is in France," said Christy Shields, an anthropologist at the American University in Paris who specializes in comparing eating habits of Americans with those of the French.
"Here in France, it is really associated with the health of the intestine," Shields said. "I am not sure many Americans are even aware that yogurt contains live bacteria."
Dannon's new products include Activia spinoffs such as the non-fat, low-sugar Activia Light and bacteria-enhanced children's yogurt Danimals, as well as a low-fat yogurt without preservatives called All Natural. The company also is increasing distribution of DanActive, the U.S. version of Actimel.
"U.S. consumers are now ready for these products," Dalto said. "Health is a concern, and so is diet."
Dannon will start promoting the new products on television this week. Its yearly advertising budget exceeds $60 million.
"Dannon has done a tremendous job in marketing yogurt in this country," said Burt Flickinger, managing director of Strategic Resource Group, a branded consumer-products and retail consulting firm in New York. "Obesity in the U.S. has reached critical proportions, so there is acute need for healthier eating."
Dannon has helped bring customers more regularly to retailers such as Kroger Co. and Target Corp. that sell the yogurt, Flickinger said. "People who start buying the yogurt feel they have to buy it every day for the health benefit," he said.