‘Changing of the guard’ among top dairy firms

02-Aug-2015 - Last updated on 03-Aug-2015 at 10:37 GMT

Lactalis has risen to become the second largest dairy business in the world

There has been a “changing of the guard” in the dairy sector as French firm Lactalis has overtaken Danone as the world’s second largest dairy company, according to Rabobank.

Nestlé remained the biggest dairy company on the planet with a dairy turnover of $27.8bn (£17.7bn).

Lactalis was aided by a “vigorous acquisition programme” which included deals in India, Brazil, Australia, Turkey and the EU, Rabobank claimed. Its turnover was £9.34bn last year, taking it ahead of Danone, which had a turnover of £9.33.

‘Scarcity of large acquisitions or mergers’

This activity came despite a “scarcity of large acquisitions or mergers” by the world’s top 20 dairy companies in the past 18 months, Rabobank added.

The value of mergers and acquisitions fell “significantly” below that in the previous year, with fewer large deals completed, Rabobank said.

During 2014, 109 dairy transactions took place, 16 of the top 20 companies merged, were acquired or established a joint venture over the past 18 months.

Lactalis acquired or expanded its share in 12 companies over the past 18 months, Rabobank claimed.

Several of the largest transactions in the dairy sector occurred outside the top 20, such as Agropur’s acquisition of Davisco; TPG’s investment in Chobani and Hormel snapping up CytoSport.

The Dairy Farmers of America leapfrogged FrieslandCampina to become the fourth largest dairy firm.

The move came off the back of the Dairy Farmers of America’s merger with Dairylea.

Top 20 dairy companies

The top 20 is completed by Arla Foods, Saputo, Dean Foods, Yili, Mengniu, Unilever, Sodiaal, DMK, Savencia, Kraft Foods, Meiji, Schreiber Foods, Land o’Lakes and Müller.

Rabobank Global Dairy Strategist Tim Hunt said: “While the names of the world’s 20 largest dairy companies will be familiar to industry followers, the order saw something of a shakeup compared to 12 months prior.

“Currency shifts impacted company rankings, but also highlighted the deterioration of economic growth and near-term growth prospects for dairy in many emerging markets, along with enhancing the buying power of US and Chinese companies.”

Faced with slowing growth at home, Chinese companies must harness improved spending power if they are to continue to rise up the ranks at the pace they have achieved over the last decade, Hunt added.