In 2014, we made great strides in advancing our mission. By creating and building authentic brands that change the marketplace and the way consumers think about our categories, we are positioned where consumers are headed.
With passion and conviction, we highlighted our first full year as a stand-alone company not only by achieving strong market and financial results, but also by acquiring Earthbound Farm and So Delicious. We also launched our plant-based joint venture (JV) in China.
Earthbound Farm, the No. 1 organic packaged salad brand in North America, also produces and markets an extensive line of organic greens and produce, as well as dried fruits and snacks. The company provides WhiteWave with a foothold in fresh foods, one of the most attractive emerging trends in the food industry today. So Delicious expands our leadership in plant-based foods and beverages with frozen dairy-free desserts, yogurts, beverages and creamers.
WhiteWave is the fastest-growing food company in America1 and our Alpro plant-based foods and beverages are experiencing enviable growth in our core Western European markets. Organic growth underlies our strong overall sales increases, which are due largely to a track record of innovation across all of our businesses.
1 Source: Nielsen xAOC 52-week period ended 12/27/2014. Dollar sales for all vendors in Dairy/Deli/Frozen/Dry Grocery.
Evidence of consumer acceptance is apparent in our 2014 financial performance. We reported record net sales of $3.4 billion, a 35 percent increase over 2013, and adjusted operating income of $304 million, up 45 percent from a year ago. We also continued to benefit from our increased scale, capital investments in the supply chain and rigorous expense management to significantly expand our operating margin and generate adjusted diluted earnings per share (EPS) of $1.00, a 36 percent gain from last year, excluding our investment in the China JV, which was equivalent to $0.05 of adjusted diluted EPS.
Our diverse portfolio of large-scale brands is not only growing substantially, but most of these brands are leaders in their categories. In North America, we hold the top market share in plant-based foods and beverages (Silk and So Delicious), premium dairy (Horizon), and organic greens and produce (Earthbound Farm), as well as the No. 2 position in coffee creamers and beverages (International Delight). We are also No. 1 in Europe’s plant-based foods and beverages category (Alpro and Provamel).
Financial results in this annual review are presented on an adjusted basis for 2014 and 2013. For an explanation of the adjusted results, please see “Additional Information”
While the world around us changes, we preserve our spirit and principles, which in turn is rewarded with consumer loyalty. We are proud that WhiteWave has helped create every category in which we compete, bringing innovation and vision to some of the industry’s most dynamic markets.
From its origins in soy, the Silk brand continues to lead a plant-based market in which almondmilk now accounts for almost 70 percent of the entire category. In 2014, we introduced Silk cashewmilk and re-launched our dairy-free yogurts, which are extending the brand further and helping build consumer acceptance across the portfolio. So Delicious has been making plant-based, non-GMO foods and beverages for more than 25 years and expands our capabilities in dairy-free yogurt, beverages, creamers and frozen desserts. Alpro’s plant-based foods and beverages portfolio includes almond, hazelnut, rice, oat and soy. New additions include chocolate almondmilk, cremoso yogurt and coconut cream alternatives.
As we continue to transform and embellish the coffee experience, we are strengthening our position in the coffee creamer and beverage segment. Our International Delight and Land O Lakes® creamers bring all the pleasure of the coffeehouse to people at or away from home. Our flavors range from popular classics like hazelnut and french vanilla to on-trend innovations like our new macchiato line. We have expanded beyond flavoring coffee to offering our own beverages, including ready-to-drink iced coffees and new chai tea lattes.
More than 20 years ago, Horizon helped pioneer the organic dairy movement, becoming the first brand to supply organic milk nationwide. Horizon is still breaking new ground today, innovating under its “center of store” strategy in 2014. By rolling out family favorites like macaroni and cheese, plus crackers and cookies with organic ingredients, we extended the brand beyond the dairy case, generating strong repeat usage and product diversification in the better-for-you meal and snack categories.
Earthbound Farm built its reputation on the belief that scaling the production of nutritious organic food makes for healthier people and a healthier planet. We are creating consumer demand for convenient products like organic packaged salads, including the 2014 launch of all-organic Power Meal Bowls. Earthbound Farm is the share leader in organic packaged salad and is one of the top brands in organic fresh and frozen fruits and vegetables.
Our plant-based JV with Mengniu Dairy Company went to market in the fourth quarter of 2014, providing the world’s most populous nation with access to environmentally sustainable and healthy products. In just 10 months, we worked together to complete construction of a production facility in Zhengzhou, and officially launched our almond and walnut beverages under the Silk ZhiPuMoFang brand in late December.
Additionally, networks in North America and Europe provide WhiteWave with the necessary competitive resources—broad commercial manufacturing and processing capabilities, an efficient and modern plant network and a diversified supplier base—to support and sustain our growth. In 2014, we increased our capital investments to nearly $300 million to build greater manufacturing and distribution capacity in both Europe and North America, which will enable our future growth and allow additional cost leverage.
We are committed to reducing our impact on the planet through responsible sourcing and sustainable packaging, as well as by reducing waste, water usage and greenhouse gas emissions per pound of product produced in our operations. On an adjusted basis, our Americas Foods and Beverages segment has reduced CO2 emissions by 32 percent and waste to landfill by 28 percent per gallon of product, even as production volumes increased by 57 percent since 2006. In Europe, since 2008 Alpro has reduced CO2 emissions by 50 percent per ton of product and reduced waste to landfill by 28 percent, more than offsetting a 26 percent increase in production volume.2 Alpro, the first European food company to participate in the World Wildlife Fund’s Climate Savers program, invests in renewable energy and has implemented a range of projects designed to help the company reach its ultimate goal of carbon-neutral production.
At the same time, as a food company, we are sensitive to improving food and food security—particularly in the communities where our employees live and work—through long-standing partnerships with a number of organizations. They include Feeding America, one of the largest hunger-relief organizations in the U.S., and Alpro’s exclusive international sponsorship of Malnutrition Matters, which helps provide plant-based and protein-rich foods in regions of the world that are vulnerable to famine.
2 Most recent 2013 data provided. Updated 2014 information will be available later in the year.
Source: Nielsen xAOC brand positions as of 12.27.2014, and Nielsen U.S. Foods brand position for Earthbound Farm® as of 1.3.2015. Retail sales represents all coffee creamers and beverages including Land O Lakes; brand position represents International Delight only.
Beyond delivering record financial results in 2014, we completed two important acquisitions, launched several new and innovative products, successfully extended our brands into new categories and increased the capacity of our plants in the U.S. and Europe. WhiteWave has been one of the fastest-growing food and beverage companies in the U.S. for the past four years by nurturing what were once small, exciting brands into market-leading successes. In Europe, Alpro expanded its leading market share to more than 42 percent in 2014 and its new product pipeline is full again this year. We have the scale and resources to bring products to market fast and redefine consumer preferences for nutritious, great-tasting and accessible foods and beverages.
Looking ahead, we want to continue our growth trajectory and further shape the company by entering new categories, investing more in research and development and our supply chain, expanding our reach beyond current geographies, and stimulating our collective creativity to fuel even greater growth and magnify shareholder value.
The adjusted results differ from the Company’s results under GAAP due to the following: