Page 20 - Food&Drink Magazine October 2021

DAIRY BUSINESS
The dairy-go-round
Rabobank senior dairy analyst Michael Harvey gives an overview of changes to the global dairy landscape.
FRENCH-BASED dairy company Lactalis has overtaken Swiss giant Nestlé to become the world's largest dairy company with its US$23 billion turnover placing it atop Rabobank’s latest annual Global Dairy Top 20.
Nestlé took second place for the first time in decades with US$20.8 billion in revenue while Dairy Farmers of America maintained its third placing with US$19 billion.
Organic growth, combined with its dedicated global merger and acquisition (M&A) strategy, has propelled Lactalis from ninth place just a decade ago into a commanding position
in 2021.
The company has made several international acquisitions, adding around 60 deals and expanding its
global footprint throughout the Middle East, Africa and North and South America.
With deals pending for the Kraft Heinz natural cheese business and Groupe Bel’s Royal Bel Leerdammer, Bel Italia, Bel Deutschland and Bel Shostka Ukraine – which have a combined annual turnover of about $US2.5 billion – it is likely Lactalis will extend its lead into the future.
The report showed 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, which demonstrates resilience in dairy consumption in most dairy markets in the face of unprecedented channel disruptions due to COVID-19.
The report also showed that while dairy-related M&A
activity slowed in 2020, with about 80 announced deals compared to the previous year’s 105, activity picked up again in the first half of 2021 with more than 50 deals announced to midyear.
CHANGING DEMOGRAPHICS
With its international focus, Lactalis is well positioned to capitalise on global growth opportunities brought about by changing demographics.
Over the next decade more than 35 per cent of global population growth will occur in Africa, which remains a net and growing dairy importer, largely buying from international players in the Global Top 20.
There will be pockets of flourishing regional domestic production growth, such as in
East Africa, based on the availability of natural resources and progress on social, economic and political stability. Indonesia will also remain a growing market for global dairy exporters.
China will continue to reign as the world’s largest dairy importer, however broader demographic changes including an ageing population will see their dominance in the infant nutrition market moderate while growth in the over-50s “Active Silvers” segment will intensify.
The US and EU-27 markets are expected to be ageing and affluent, attracting innovation and competition.
SUSTAINABILITY AND ALTERNATIVES
Rabobank anticipates investment activity from the global dairy giants to stay robust in the on-trend channels and categories, including specialty cheese, innovative dairy ingredients like human milk oligosaccharides, dairy alternatives ranging from plants and fermentation to cell-based, and lifestyle nutrition.
The sales growth of liquid milk and yoghurt alternatives – especially oat- and almond- based alternatives – have not gone unnoticed.
Most significantly, Danone’s turnover in dairy alternatives, following its acquisition of WhiteWave Foods in 2017, grew by 15 per cent compared with the previous year.
Sustainability-marketed US milk sales grew by more than 20 per cent from 2013 to 2018,
20 | Food&Drink business | October 2021 | www.foodanddrinkbusiness.com.au