Danone buys majority stake in coconut products maker Harmless Harvest


Emma Hayes

There I was in a hot yoga studio with plenty of bright natural light and bending myself into pretzel like positions for the very first time.



Dive Brief:

  • Danone’s venture capital arm, Danone Manifesto Ventures, acquired a majority stake in Harmless Harvest, a producer of organic coconut-based products. The amount paid and the stake Danone now owns were not disclosed. Danone Manifesto Ventures led a $30 million capital growth round in Harmless Harvest in 2017 and invested in the company in 2009 when it was founded.
  • The new investment will provide Harmless Harvest with additional resources and operational capabilities to help it grow and expand its sustainability initiatives. Harmless Harvest is the first U.S. investment to become majority-owned by Danone’s venture capital arm.
  • The deal will accelerate the growth of Danone‘s plant-based business and allow it to offer more products in the category to consumers. The France-based company is targeting €5 billion ($5.95 billion) in plant-based sales globally by 2025.

Dive Insight:

Just a few years ago, it seemed every CPG food and beverage company was starting a venture capital unit to uncover new, up-and-coming brands and to enable them to quickly enter faster-growing, trendier categories. Danone was no exception, launching its Manifesto Ventures unit in 2016. Since then, it has invested in companies such as Laird SuperfoodForager Project and Nature’s Fynd.

But the decision to take a bigger stake in Harmless Harvest is one of the few examples where an early venture capital investment has led to an acquisition or ownership of a majority stake. Companies like Danone have had time to get to know the management team, the company and the brands and now are comfortable taking a larger financial stake. Mondelēz International purchased Hu Master Holdings, a maker of premium snacks and chocolates made from simple ingredients, in January after taking a minority stake two years earlier.

Harmless Harvest has a lot of attributes that Danone itself has been adopting. Its coconut-based products are organic, which is a priority for Danone as consumers keep a closer watch on eating healthy.

Harmless Harvest also differentiates itself through its Fair for Life certification. This is awarded to sustainable businesses that support social, agricultural and environmental improvement. In 2018, Danone’s North America operations achieved B Corp certification, which is given to companies “using business as a force for good through their commitment to social and environmental performance, accountability and transparency.”

Harmless Harvest’s use of coconuts complements Danone’s push to increase its plant-based focus following its 2017 purchase of WhiteWaveadding brands such as So Delicious and Silk to its portfolio. In February, Danone acquired plant-based pioneer Follow Your Heart, a manufacturer of Vegenaise spread, dairy-free cheeses, plant-based dressings and VeganEgg.

Laurent Marcel, CEO of Danone Manifesto Ventures, and Ben Mand, Harmless Harvest’s CEO, said in an interview the transaction will allow each company to leverage the other’s strengths.

Harmless Harvest will benefit from Danone’s innovation prowess, marketing and sales team, global supply chain and opportunities to strengthen its Earth-friendly mission and portfolio at a faster rate. At Danone, the deal will allow it to tap into Harmless Harvest’s like-minded mission and expanding product line to fill a gap in its plant-based portfolio with coconut-based options.

Danone already manufactures Harmless Harvest’s yogurt, which was introduced in 2020 at a plant in the U.S. Marcel said Danone could eventually decide to bring Harmless Harvest to other parts of North America, Asia or Europe.

“Our role with [Danone Manifesto Ventures] is really to explore the adjacencies of the Danone portfolio and look at other brands or products or categories that are close enough to the Danone vision of the future of food and not yet exactly the same as what Danone does already,” Marcel said. “Coconut water is not a big category for Danone today …but it is very aligned with Danone’s ambition to bring healthier food and beverage options, be it natural, organic.”

Danone is in the midst of a meaningful period of upheaval in both its business and executive ranks, punctuated by the removal of its CEO amid investor discontent with the company’s underperforming brands and lackluster share price. Danone announced in May that Barry Callebaut chief Antoine de Saint-Affrique will be taking over as CEO starting Sept. 15. 

Danone is facing pressure across many of its businesses, including yogurt, bottled water and even plant-based offerings where other CPGs and smaller firms have a major presence in this category. The company is in the process of conducting a strategic review of its portfolio of brands, SKUs and assets. It recently sold its stake in China Mengniu Dairy for $2 billion and its plant-based powder brand Vega to funds managed by a private-equity firm.

The divestitures give Danone more powder to add faster-growing brands to its portfolio. Meanwhile, Harmless Harvest expects to generate more than $100 million in sales in 2021, doubling its revenue from 2017.

Mand said Danone provided the best opportunity to grow the company and follow through on its mission. “It’s important for a brand like Harmless to have a partner that is like-minded, shares the same vision for the future, and brings a tool chest of capabilities that we can leverage as we need,” he said.

Once de Saint-Affrique takes over and gets more familiar with Danone’s business, it’s possible the pace of divestitures and acquisitions could pick up. 

Marcel said he was optimistic Danone could decide to acquire larger stakes in other companies its Manifesto Ventures unit has invested in previously.

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Emma Hayes

There I was in a hot yoga studio with plenty of bright natural light and bending myself into pretzel like positions for the very first time.