WhiteWave Foods Rides Almond Milk Wave In U.S., Europe


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Got almond milk? If so, you're not alone.

For health and dietary reasons, consumers are increasingly opting for plant-based alternatives to conventional dairy milk.

In the past few years, almond milk has risen to the top of the plant-based category.

With a nearly two-thirds share in the U.S., it has surpassed soy milk in popularity.

Beverage and packaged-goods companyWhiteWave Foods Co. ( WWAV ) is feeling the love for almond milk.

First-quarter sales of its Silk-branded almond milk in North America rose 52% from the prior year, helping drive total sales up 13.2% to $171 million for the firm's North American plant-based food and beverage segment.

Multiple Tastes

Silk-branded soy milk and coconut milk are also part of the category. The company doesn't break down sales by product mix.

Demand for almond milk has been so strong that WhiteWave has been "shifting shelf space away from soy to almond milk," CEO Gregg Engles said on a first-quarter conference call.

WhiteWave plans to step up investments in production capacity so it won't run out. The company focuses on high-growth food and beverage categories that are aligned with emerging consumer trends.

"The shift away from conventional dairy to plant-based alternatives is becoming more of a mainstream phenomenon, and we continue to be the beneficiary of that," Engles said.

The company manufactures, markets and distributes plant-based food and beverages, coffee creamers and beverages, premium dairy products and organic greens and produce in North America and Europe. Its products are sold to grocery stores, mass merchandisers, club stores, convenience stores and food-service channels. Customers includeWal-Mart ( WMT ),Kroger ( KR ) andSafeway ( SWY ).

A new business in packaged organic greens and produce came via WhiteWave's $600 million acquisition of organic-food company Earthbound Farm in January.

With Earthbound Farm, WhiteWave now has a 56% share of the branded organic packaged salad segment, according to WhiteWave.

Earthbound added $146 million to WhiteWave's first-quarter sales basket -- a big reason for the firm's 36.5% jump in total revenue to $830 million.

Excluding Earthbound, sales in the quarter grew 12%.

WhiteWave's Q1 earnings climbed 38% to 22 cents a share.

"There are very few pockets of growth in food right now, and health and wellness is one of them," said John Baumgartner, analyst at Wells Fargo Securities.

WhiteWave has real cow's milk, too. It's the organic variety, a category that has been taking share from conventional milk.

The company's organic milk is sold under the Horizon brand.

WhiteWave's premium-dairy revenue, which includes organic milk, rose 8.2% to $154 million during the first quarter, accounting for nearly 20% of total revenue.

Coffee creamers and beverages, however, remain the company's largest category, thanks to a consumer trend focused on personalizing at-home coffee consumption. These products are marketed under the International Delight and Land O'Lakes brands.

First-quarter sales in the segment grew 9.3% to $234 million, driven by new products and flavored creamers.

WhiteWave was spun off fromDean Foods ( DF ) as a separately traded company in October 2012. Dean sold its majority stake in WhiteWave several months later.

WhiteWave's sales and earnings have grown in double digits the past five quarters. Analysts expect full-year earnings to increase 32% in 2014 and an additional 18% in 2015.

While analysts predict a 32% gain in revenue this year, they see an 8% rise in 2015 without the boost of an acquisition like Earthbound Farm.

Meanwhile, Europe is providing another bounce for WhiteWave. First-quarter revenue in Europe, which accounted for about 15% of the total, rose 24% from the prior year to $126 million. Growth was led again by almond-milk sales.

During the conference call, Engles said almond milk in Europe is showing the same kind of growth seen in the U.S. four or five years ago. Almond milk was launched in Europe less than two years ago. Soy milk is still the top beverage there for WhiteWave.

One reason for the share shift from soy milk to almond milk in the U.S., Baumgartner says, is due to studies that have linked soy milk to increased risk for breast cancer because of its estrogen levels. These studies have been disputed, however.

Dairy-milk alternatives come with different nutritional benefits. Almond milk has fewer calories than soy milk and no saturated fat, but little protein. It's high in vitamins E and D.

Soy milk has more protein, B vitamins and potassium and magnesium. But it can cause bloating.


WhiteWave's plant-based food and beverage group in Europe operates under the Alpro and Provamel brands. Alpro, which includes almond and soy beverages, has the No. 1 market share in its nine largest markets there.

China could become a meaningful contributor to WhiteWave starting later this year through a joint venture with Mengniu Dairy, the largest dairy company in China. WhiteWave is in the process of commercializing the venture.

"Soy milk in China is a $2 billion category and growing over 10% (annually)," Baumgartner said.

Meanwhile, line extensions in the U.S. are ramping up this year, including new almond and coconut milk blends under the Silk brand.

Horizon has new snack crackers and cookies and macaroni and cheese. The Earthbound division is bringing out new meal bowls.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas
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