Danone Backs Guidance as Shoppers Welcome Easing Price Hikes

By Dominic Chopping

Danone backed its full-year sales guidance as it eased the pace of price hikes and saw shoppers begin to buy more of its branded products.

The French food company behind Activia yogurt and Evian water said Wednesday that like-for-like sales growth in the second quarter was primarily driven by volumes rather than price hikes.

After a couple of years of raising prices to cover an inflation-led surge in costs, packaged food producers are beginning to ease the rate of price hikes as they try to entice customers back.

Danone lifted prices by an average of 7.4% last year, but said it would ditch broad-based pricing earlier this year as inflation began to normalize and instead focus on selective price increases on only specific products while switching from price-led growth to volume-led growth.

It increased prices by 1% in the second quarter, a smaller hike than the 1.5% expected by analysts. In the first six months, Danone raised prices by 2%, the same level as Nestle which last week said it raised prices by 2% in the first half on average, noting increased promotional activity and an acceleration in volume growth.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

July 31, 2024 01:49 ET (05:49 GMT)

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