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Coverage Initiation: The WhiteWave Foods Company
Value Line recently initiated coverage of The WhiteWave Foods Company (WWAV) in its flagship product, The Value Line Investment Survey. The company manufactures, distributes, and sells plant-based packaged food and beverage products throughout North America and Europe. The company, as it is known today, was formed in October of 2012, when it was spun off from former parent company Dean Foods (DF). As of December 31, 2012, it employed around 2,600 workers. The North American headquarters is in Broomfield, Colorado. In July, the company moved its international corporate headquarters from Dallas to Denver.
North American operations account for an outsized portion of the business, producing 84% of sales in 2012. WhiteWave’s business can be divided into four main product categories: North American Coffee Creamers and Beverages (34% of total 2012 sales), North American Plant-Based Foods and Beverages (24%), North American Premium Dairy (24%), and European Plant-Based Foods and Beverages (16%). The company boasts that it combines small food ideology with big food capabilities. That is, while most of the company’s product lineup offers similar benefits of what a consumer could find at a farmer’s market, they are also able to reach a larger customer base using its wide production abilities and distribution channels. WhiteWave’s other calling card is its innovation, creating new products from soy and almond to create healthy alternatives to the slew of processed food products that monopolize the shelves of most grocery stores. The company essentially invented a food market in Europe with its almond-based Alpro line of dairy products, and has since grown its presence to account for 39% of the plant-based food industry on the continent. By continuing to deliver healthy, responsibly produced, and, most importantly, great tasting manufactured goods, WhiteWave looks poised to continue to grow in scope and value.
The strong and promising product lineup, from the immensely popular LAND O LAKES to fast-growing, next-generation names like Horizon Organic, seems to be perfectly aligned with consumer preferences for healthier and more environmentally friendly food and beverage choices. Some of its dairy-alternative products, like Silk, are made using soy and almond, offering calcium and nutrient levels tantamount to the milk, but without cholesterol. Management is determined to keep building the company’s brands and innovating new plant-based products to better serve consumers, which augurs well for the company’s near- and long-term growth strategy.
Given the mounting popularity of WhiteWave’s products, the market for healthy alternative food and beverage products is predictably competitive. The space is occupied by both large and small manufacturers alike, each of which constantly threatens to steal away market share from WhiteWave and its ethos of having a small food mentality on a large food scale. Cash-heavy conglomerates like Kraft (KRFT), Nestle (NESM), and General Mills (GM) are constantly vying to penetrate the growing sector, while smaller companies like Organic Valley already boast widespread and loyal customer bases. As is such, continuing to enhance brand awareness and loyalty is high on the company’s list to ensure sustained success.
Subscribers interested in owning a piece of this large-cap food and beverage manufacturer are advised to consult Value Line’s quarterly reports for The WhiteWave Foods, as well as any supplemental reports and relevant articles as important news items arise.
At the time this article was written, the author did not have positions in any of the companies mentioned.