Emmi has acquired a 40% stake in Brazilian dairy producer Laticínios Porto Alegre – one of the largest milk processors in Minas Gerais state.
Based in Ponte Nova – 175 miles north of Rio de Janeiro – Porto Alegre has gained strong positions in cheese, UHT milk, butter and whey powder products. The deal will strengthen Emmi’s presence in the Brazilian market and help it forge ahead with its programme of international growth, three months after agreeing a deal for dessert manufacturer Italian Fresh Foods.
Indeed, the Swiss dairy has announced a series of acquisitions in the past year aimed at broadening its reach – including in the US, Switzerland and Chile. The latest deal in Brazil will give the company access to a second South American market, after its Spanish subsidiary, Kaiku, increased its stake in Chilean dairy company Surlat last May.
Emmi CEO Urs Riedener commented: “Laticínios Porto Alegre is a healthy company that has also done an excellent job in the recent years of economic difficulty. Its strong position provides Emmi the possibility of complementing its product portfolio with innovative product and marketing concepts, thereby creating additional opportunities in a market with a great deal of potential over the long term.”
Porto Alegre’s business is mainly concentrated in Minas Gerais state, which, with a similar size to that of France and a population of approximately 20 million, is Brazil’s second largest state after São Paulo. Its offering in the cheese category – alongside other products like UHT milk and butter – includes traditional natural cheese, mozzarella and requeijão (fresh cheese).
In 2016, the company generated sales of approximately BRL 500 million ($157.08 million) and employs around 1,000 people. Its head office and one production facility are located in Ponte Nova, with another plant in Mutum, also in Minas Gerais state.
The company also recently purchased production infrastructure in Barbacena to focus on the manufacturing of fresh cheese products.
An Emmi spokesperson continued: “Porto Alegre is a very well established company with a modern production and distribution infrastructure. Over the past few years, it has developed extremely well, with growth rates that have outperformed the market. This was due in part to the excellent raw milk base of the company, which has been built up through successful cooperation with milk producers. The product portfolio has for some time been changing from basic products towards more premium dairy specialities, an area in which the collaboration with Emmi will create further opportunities.”
The company claimed that its investment was a sign of growing stability in the Brazilian economy, which was hit hard by the fallout of BRF and JBS’ indictment in a food corruption investigation that centred around exports of unsafe meat.
But, following a number of years of economic difficulties, Brazil’s economy is beginning to stabilise: inflation has fallen in recent months, and the Brazilian real has recovered to hint at future economic growth.
The country is by far the largest economy, and the most important dairy market, in Latin America. Its prosperity is crucial to the region’s food industry and Emmi’s latest investment will be a welcome sign of improvement.
The country produces more than 34 billion kilograms of milk a year, ranking among the world’s largest milk producers, and Emmi’s acquisition of a 40% stake in Porto Alegre offers a good opportunity to be present in this attractive market.
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