Moving around in the top 20
The Rabobank annual report on the Top 20 global dairy companies always makes for interesting reading. Nestlé and again topped the charts, followed closely by Lactalis and Danone. In fact, if you are in Europe or the US, you probably have enjoyed some dairy from one of these very large companies in the past week or so. I know I have.
The Chinese dairy giants are there in slots nine and ten, but it remains to be seen how long they will mill around without making further acquisitions and moving into the very top tier of multinational players. I suspect it is just a matter of time, as the deals sped up in 2017, with 127 purchases, versus 81 the year before.
There were big deals in dairy, as Danone bought of Whitwave in the US, and Saputo took over Murray Goldburn, but this had little impact on where the companies sat in the table. Meanwhile, dairy price recovery saw an improvement of 5.1 per cent in euro terms, the analysts note.
As Rabobank points out, some of the largest deals were outside the top 20, as Mexico’s Grupo Lala purchased Vigor in Brazil. The analysts predict the dairy market will grow 30 per cent in volume and value, due to population growth, income growth, and urbanisation. It also predicts further purchases of startups as new market segments emerge in the sector.
Further, the bank says co-operatives continue to dominate the sector, occupying four of the top slots in the list. However, the expectations of many farmer-cooperative members to receive the maximum milk price has left co-operatives with limited funds to support future growth. Also, dairy co-operatives face a constant battle to find the right and/or innovative structure to help access outside capital, with the high-profile failure of Murray Goulburn leading cooperative boards to be more risk-averse, Rabobank points out.
Overall, it is a very interesting time to be in dairy, and I suspect 2018 will have a few more surprises up its sleeve before the year is out.