Lactalis still top of Rabobank Top 20
Credits: Lactalis Group website
Lactalis of France remained in the top spot of Rabobank’s annual Global Top 20 report, with its worldwide spread of companies. It became the first company ever to exceed US$30 billion in annual dairy-related revenue, an accomplishment that follows several years of significant revenue expansion through organic growth and acquisitions. The increase in turnover was slight, 0.3% in the sector, versus 8.1% growth the previous year, and Nestlé reclaimed its spot as number two globally this year, while Dairy Farmers of America dipped to number three. Rabobank says that fewer than half of the companies listed maintain the same position as last year, while foreign exchange (FX) rates continued to impact the overall rankings, and there was limited mergers and acquisitions again this year.
Lower milk prices were named as a cause of the lower revenues, with the trend particularly affecting European cooperatives, Rabobank notes. Despite this, many companies have managed to report stronger profits and margins than in the previous year, it says.
One notable development was with Mexico’s Grupo Lala, which secured a position in the Global Dairy Top 20 for the first time, due to favourable FX developments and 6% organic revenue growth in Mexican peso terms. The strengthening of the Mexican peso against the US dollar by 11.8% played a significant role in Grupo Lala’s ascent, displacing Ireland’s Glanbia from the list.
In mergers and acquisitions (M&A), the dairy industry continues to experience limited activity, with Danone’s divestment of its Russian business and the shedding of its Horizon Organic and Wallaby brands being notable exceptions. These strategic moves reflect a broader industry trend of companies refocusing on their core businesses, according to Rabobank.
Going forward, change is coming, in the form of Unilever’s planned divestment of its ice cream business and Fonterra’s decision to shed its consumer business. These are indicative of a strategic pivot toward core operations, with sustainability considerations playing an increasingly important role, Rabobank says.
The US plans on more inward development, with companies are focusing on internal growth rather than acquisitions, with over US$7 billion planned for new plant construction and expansions from 2023 to 2026, mainly in cheese production. Milk production is expected to grow again in 2025 after three years of stagnation. This trend contrasts with other regions where plant closures are more common due to limited milk production growth. Significant investments by US dairy companies and foreign firms with US facilities could lead to revenue growth and changes in the Top 20 rankings next year, the analysts conclude.
