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Dannon to pump almost $90m into Ohio yogurt plant

By Elaine Watson , 05-Jul-2011

Almost $89m will be pumped into Dannon’s Minster yogurt plant in Ohio over the next three years as parent company Danone attempts to step up a gear and drive US yogurt sales beyond the 10 percent annual growth it has notched up over the past seven or eight years.

Claimed to be the largest yogurt manufacturing plant in the world, Minster employs more than 400 people and makes products including Activia, Danimals, Danonino, Oikos, Light and Fit and Dannon branded products. The additional investment will create up to 100 new jobs.

Dannon is keeping details of the expansion plans close to its chest but says “additional production equipment will be added, and a building expansion may be part of the plan”.

A whopping $88m will come from Dannon’s coffers, while up to $1m will come from the State, assuming Dannon’s growth targets are met, said a spokesman.

“The incentives and grants, which will be phased in over a three year period, include tax credits for job creation, funding for training, and reimbursement for investments in equipment”

Up to 100 new jobs

He added: “It is possible that up to 100 jobs may be created as a result of the Ohio job creation tax credit. It is the Company’s hope and ambition to add as many new jobs as needed to sustain growth over the next three years, which if accomplished will trigger a tax credit of up to 60 percent of employee salary tax withholdings for up to seven years.”

Dannon, which is headquartered in White Plains, New York, also makes yogurts at Fort Worth, Texas and West Jordan, Utah. Its French parent Danone also owns a majority stake in organic yogurt maker Stonyfield Farm, based in Londonderry, New Hampshire.

Speaking to analysts in April about Danone’s first quarter 2011 sales, chief finance officer Pierre-Andre Terisse, said US yogurt sales were growing at around 10 percent – just above the market, which he claimed was growing in the high single-digits.

Greek yogurt sales are driving the category

Greek would be a big focus for the year ahead, he said: In some instances what's driving the category up today is Greek. We see Chobani [Greek yogurt] being up, we are essentially stable and somebody else is a bit under pressure for the time being.

“And on the Greek, we believe we have an offer which is not sufficient at the moment. Therefore we are reworking on it and as a result we are working in the lower part of our ambition in the US.

“Our ambition is basically to grow between 10% and 20%. 10% is what we have been delivering over the past seven or eight years as an average growth. That's what we are growing at the moment. It's obvious that our ambition is to grow faster than that. But for this we'll need to adjust a bit the offer, strengthen the Greek offer, and that's going to be the target for the rest of the year.”

Commenting on the nature of this adjustment, senior director of public relations Michael Neuwirth said: "We have not reformatted the range but we have added a manufacturing line [at Minster] to increase our production capacity."

Activia

Sales of probiotic brand Activia, meanwhile were still growing in the US, but “not at the same speed as in the past”, said Terisse. “In the US … the market has been growing much faster in Greek in the first quarter than it has been on the rest of the segment, including Activia.”

According to IRI Symphony market data (which includes supermarkets, drugstores and mass merchandise outlets but excludes Walmart), Activia sales topped $444m in 2010, compared with $383m in 2009.

Dannon, which recently came to an ‘administrative settlement’ with the Federal Trade Commission (FTC) over probiotic claims about Activia and its DanActive dairy drink, extended the Activia range in February with a granola-blend called Parfait Crunch.

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