Dairy group Danone is at the top of the list for category dominance in the European food sector, followed by Unilever and Nestle, according to a new report by Sanford C. Bernstein Research Company of USA. The researcher identifies a sustainable top line growth based on categories, markets, category dominance and execution. Holding the top position in a category is considered a major business advantage, not only because of higher sales volumes but also because it allows for improved negotiations with retailers and better pricing power, according to the report:

“We consider that category dominance is important for top-line growth and margin growth. We believe that dominance allows a company to grow faster and be more profitable than smaller, less dominant players in a category’ Being number one or number two in a category “frequently enables ‘Category Captain’ status, which allows the company to work hand-in-hand with retailers on consumer insight and shelf space/positioning. It also protects against a growing trend by retailers to reduce SKUs and have a more focused offering of ‘Top 2’ and value/private label products.”

Bernstein report evaluated the category dominance on a category/country level by using 100 food categories in 80 countries and  found that Danone is at the top position in category dominance, mainly generating from the fact thatDanone is focused mainly in four businesses.

“Danone is the number one player in categories/markets representing 71 per cent of sales, and is Top 2 in 91 per cent. More specifically, in yoghurts it is number one in categories/markets representing 84 per cent of sales, and is Top 2 in an exceptional 96 per cent,” writes the report. 

Unilever is in second position The report estimates that Unilever stays at number one position  in 63% of sales and Top 2 in 85%. In certain categories, such as ice cream, Unilever was found to be dominant in many of the European markets in which it operates.

Nestle shows at a third place, being number one in markets representing 59% of sales and Top 2 in 82%. “It is interesting to note that one of the categories that drags down its dominance measure is chocolate confectionery, even when calculated on a country by country basis,” says the Bernstein report. 

source: dairyreporter.com