Danone Romania CEO predicts 5-10% growth in volume

Danone Romania, the local unit of the Paris-based yoghurt maker, said it expects 5-10% increase in sales volume, as compared with 3% advance recorded last year.
Danone Romania’s 2009 turnover grew 3% to 453 million lei, while profit margin dropped 1% to 7%.

The company holds a market share of 50% in fresh dairy products (yoghurt, buttermilk, kefir, skim milk, sour cream and deserts), and 60% in yoghurt market. Danone is also a market leader in fruit yoghurt market with 72% share.

“2009 results are attributed to the intensive promotion and decline in prices, a good example being the Casa buna range where we lowered prices by 22%”, said Stephane Batoux (photo), chief executive of Danone Romania.

For this year, the yoghurt maker expects a 5-10% rise in sales volume on the increase of yoghurt consumption per capita.

“We have more Romanians consuming yoghurt than we had in 2009. The local dairy market still has a significant growth potential, as annual yoghurt consumption per capita is 5kg. In other countries, the average consumptions is around 15-20kg per capita. The key to fulfill this potential lies in innovation”, said Batoux.

The company reported 5-10% year-on-year growth in first-quarter sales and a constant performance across all product ranges. “The dairy market in Romania is a «white» one, the consumers preferring basic, simple products. The fruit yoghurt segment is also moving on an upward trend”, Danone representative said.

Danone’s strategy for this year envisages a flattening of prices at 2009 level, a continuation of promotions, 10% increase in production capacity by installing new production line and increase of headcount. For the time being, the company employs 709.

Investment spend will remain much as last year, namely 20 million lei. Last year, the amount was used in the development of industrial capacity, and in the upgrade of infrastructure, logistics and distribution system. Employee training programs accounted for 1.1 million lei, while social responsibility programs cost 2 million lei.

As for the Government’s recently announced public wage cuts, Stephane Batoux says the measures will severely affect a part of Romanians.

“It is difficult to estimate the impact of these measures over consumption, they will surely affect Romanians. However, it’s time to take corrective actions to reduce indebtedness level. I do appreciate however, that the Government has taken measures to shore up private sector, a system that produces and is able to sustain buying power”, said Batoux.

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