Danone invests in French organic baby food start-up Yooji

PARIS (Reuters) - Danone's DANO.PA venture capital division is backing French organic baby food start-up Yooji, in the latest example of a big food company turning to a smaller rival whose products promote healthy lifestyles.

The logo of French food group Danone is seen during a news conference to present the company's 2015 annual results in Paris, France, February 23, 2016. REUTERS/Charles Platiau

The investment, whose size was not disclosed, is the fourth in a year for Danone Manifesto Ventures, which was founded in 2016, and highlights Danone’s response to a consumer shift toward healthy eating.

Changing consumer tastes are shaking up the mainstream food manufacturing industry, allowing newcomers who cater to growing demand for healthy food produced in a sustainable way to gain ground.

Danone’s venture capital business has already invested in French cookie company Michel et Augustin. It has also bought a stake in AccelFoods, a U.S. fund that looks for upstart natural and organic brands, and in Farmer’s Fridge, a U.S. company which makes vending machines that sell organic salads and snacks.

Danone also bought U.S. organic food producer WhiteWave in a $12.5 billion deal this year.

Other big global food companies have also tied up with smaller, independent food manufacturers that consumers regard as being healthier and more ethical.

As part of Yooji’s capital raising effort totaling 4 million euros ($4.70 million), Danone bought a stake that puts it on a par with other longstanding Yooji shareholders.

Those shareholders include Caravelle, a family owned diversified industrial group, and Capagro, a French venture capital fund dedicated to agriculture and food innovation.

Sales figures were not disclosed for Yooji, which was founded in 2012 and sells products sourced from organic farms to more than 600 stores in France.

Danone, the world’s largest yoghurt group, has recently been touted as a potential target for suitors or shareholders seeking stronger returns, as its profits lag many of its peers and it has no large controlling shareholder.

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Jane Merriman