Privately held Lactalis has unseated long-time industry titan Nestlé as the world's largest dairy company, according to Rabobank’s annual Global Dairy Top 20 report.
“Lactalis’ attention to organic growth, as well as its dedicated global merger and acquisition strategy, propelled the company from ninth place in 2000 to a dominating lead position in 2021,” Rabobank’s Mary Ledman said.
The report said the combined turnover of the top-20 industry leaders fell by just 0.1 per cent in US dollar terms, following the previous year's 1.8 per cent gain.
Merger and acquisition activity slowed in 2020, with about 80 announced deals compared to the previous year’s 105.
Activity picked up in 2021, with more than 50 deals announced through to mid-year.
In 2020, dairy companies faced significant challenges because of the COVID-19 pandemic, but overall the sector fared better than expected.
The pandemic also heightened consumers’ awareness of environmental challenges.
Sustainability as a growth driver
“Consumer sentiments are being heard, and many companies included in the Global Dairy Top 20 have made sustainability commitments for 2030 and carbon-neutrality commitments for 2050,” Rabobank’s Richard Scheper said.
According to NYU Stern Center for Sustainable Business, sustainability-marketed US milk sales grew more than 20 per cent from 2013 to 2018, compared to negative growth for the category as a whole.
Sustainability-marketed natural cheese and yoghurt sales grew by more than 30 per cent and 20 per cent respectively, compared to near 10 per cent growth for those categories broadly during the five-year period.
Alternatives blur definition of dairy
The sales growth of liquid milk and yoghurt alternatives — especially oat-based and almond-based alternatives — have not gone unnoticed.
Most significantly, Danone's turnover in dairy alternatives, following its acquisition of WhiteWave Foods in 2017, was recorded at US$2.5 billion in 2020, a gain of 15 per cent compared to the previous year.
“The designation of dairy is also becoming more blurred as hybrid products, containing both dairy and plant-based ingredients, enter the marketplace,” Mr Scheper said.
Markets tipped to remain in balance
The report said Rabobank anticipated investment activity to stay robust in the on-trend channels and categories, including specialty cheese, innovative dairy ingredients such as human milk oligosaccharides (simple sugars), dairy alternatives ranging from plants and fermentation to cell-based, and lifestyle nutrition.
At the farm level, the rising cost of production because of factors such as inflationary pressures will keep margins tight, limiting milk production growth in the ‘big seven’ exporting regions to less than 1.2 per cent.
Looking further ahead
During the next decade and beyond, changing demographics will drive dairy opportunities.
More than 35 per cent of the population growth will occur in Africa, which remains a net dairy importer — largely importing from international players in the Global Dairy Top 20.
China will continue to reign as the world's largest dairy importer.
Rather than being dominated by the infant nutrition market of the past two decades, China’s dairy sector will find growth in the ‘active silvers’ (people aged over 50 years old) market.
Download the report from: https://www.rabobank.com.au