WhiteWave’s Acquisition of SO Delicious Dairy Free Should Cement its Lead in Non-Dairy Milk Alternatives

WhiteWave Foods’ acquisition of SO Delicious Dairy Free for US$195 million is a sensible move for the company and creates an opportunity for it to establish its lead in plant-based foods. WhiteWave Foods Co – created when Danone spun off WhiteWave-Alpro in 2012 – ranks 20th in health and wellness (HW) in North America, holding a 1% value share, equivalent to US$1.3 billion, in 2013. This is already impressive for a company which only sells dairy products, many of which are plant based.

In addition, it has a strong presence in non-dairy milk alternatives – it is the number one company globally with a 13% value share in 2013 – mainly due to its Silk and Alpro brands. The acquisition is therefore a bid to expand its presence in the HW arena as SO Delicious Dairy Free is well known amongst health-conscious consumers in the US for its vegan, GMO-free plant-based foods. Its product portfolio includes ice creams, beverages, creamers, cultured products and frozen desserts.

Non-dairy milk alternatives show rapid growth

Non-dairy milk alternatives was one of the fastest growing HW categories over 2012-2013, posting 6% value growth globally. It is also a key driver in developed markets. The addition of SO Delicious Dairy Free to WhiteWave Foods’ portfolio will also increase its variants of non-dairy milk alternatives to include coconut milk, which is fast becoming a flavour of choice. In addition, for SO Delicious Dairy Free, it will enable the company to take advantage of WhiteWave Foods’ supply chain, not only in the US, its dominant market, but also in Europe and the Middle East and Africa.

In fact, non-soy-based dairy milk alternatives is emerging as a significant long-term growth category and it is outpacing growth in volume sales of conventional milk. The category is characterised by emerging new varieties, not only to titillate adventurous consumer palates, but also to cater to the spiralling number of consumers afflicted by food allergies and intolerances.

A move into lactose-free ice cream offers opportunity for growth

WhiteWave’s move into lactose-free ice cream through this acquisition is a good strategic move; as more consumers tap into plant-based foods, they will look beyond milk alternatives to other dairy products. Whilst lactose-free ice cream remains a much smaller category than non-dairy milk alternatives, its retail sales grew in constant terms by some US$71 million over the 2008-2013 period, and the US – SO Delicious Dairy Free’s main market – led global sales, with a 49% value share in 2013.

Lactose-free ice cream is also set to see increasing growth, as lactose-free foods are gaining an increasingly large consumer following, not just amongst those suffering from lactose intolerance, but also amongst a growing number of individuals who perceive lactose-free foods to be healthier than their more conventional dairy counterparts.

Value Sales of Lactose-free Ice Cream: 2008-2013

Source: Euromonitor International

WhiteWave Foods broadens its portfolio of nut- and seed-based products

Uptake of naturally healthy plant-based products will continue to grow, particularly in developed markets. In the long term, cereal- and nut-based products, such as SO Delicious Dairy Free’s coconut-based variants, will keep eating into the share of soy-based products, but it is unlikely that one single grain or nut type, such as oat milk or almond milk, will achieve an overly dominant share. Therefore, WhiteWave Foods has taken the right decision to broaden its portfolio.