Exclusive-Danone sources whey from east as costs in Europe rise

LONDON (Reuters) - France's Danone is getting more whey and aluminium from parts of Asia, a top executive told Reuters, a move which analysts said could cut costs but also antagonize European suppliers.

The dairy giant, which makes Activia yoghurt, Aptamil infant formula and Evian water, has largely relied on Europe for raw materials. But a cost inflation crisis that began with Covid-19 era logjams only to be exacerbated by the Ukraine war has left the industry struggling to rein in expenses and protect margins.

Danone has responded by expanding its commodities base into Asian markets including India, China and Southeast Asia, Chief Operations Officer Vikram Agarwal said.

"We had already started the program before the Ukraine war, and consequent supply risks and rising costs in Europe have made this even more relevant," he said.

Danone is sourcing aluminium packaging, plastic, paper packaging, and ingredients like whey and maltodextrin from outside of Europe, Agarwal said.

(Reporting by Richa Naidu; Additional reporting by Gus Trompiz in Paris; Editing by Matt Scuffham)

By Richa Naidu