Nestlé retained its position as the world’s largest dairy company last year, despite 2015 proving to be a difficult year for most, according to the latest annual survey from Rabobank.
The strong US dollar and currency volatility – coupled with low commodity prices – reduced turnovers for most companies, the Dutch banking group said. Mergers and acquisitions continued apace, as companies continued to seek additional value from domestic markets and new opportunities elsewhere.
Low dairy commodity prices and currency movements have had a dramatic downward effect on company sales values, driving the overall value of the 20 largest dairy companies down 13% to $194 billion in 2015.
While the three largest dairy companies – Nestlé, Lactalis and Danone – have retained their position at the top of the table, the rest of the list is characterised by significant jostling for position, Rabobank said. Dairy Farmers of America replaced Fonterra as the world’s fourth largest dairy company, while China’s Yili leapfrogged both the US’ Dean Foods and Canada’s Saputo to become the world’s eighth largest.
The biggest riser was Müller, which jumped five places from 20th to 15th after acquiring Dairy Crest’s dairy business, while the newly merged Kraft-Heinz was up three to 13th.
Sodiaal, DMK and Savenica all fell.
Agropur, from Canada, was the only new entrant.
Overall, the Chinese companies in the list grew at a slower rate in 2015 than in previous years, impacted by the devaluation of the yuan. Nevertheless, strong growth from Yili, the only company in the top 12 to increase turnover in dollar terms, enabled it to move up to single figures. Mengniu maintains its position at 11, with the acquisition of a majority stake in Burra Foods in Australia still pending.
And the extent of industry acquisitions reflect the increased role that the African continent plays in the dairy sector. In total, there were 14 transactions in Africa, with four more so far in 2016. This compares with only three deals recorded in Africa in the whole of 2014.
But the positive stories belie the general downward trend, according to Rabobank’s global dairy strategist.
Kevin Bellamy concluded: “The big story in this year’s top 20 list of dairy companies – based on turnover – is the shrinkage of the overall size of the pie. Low dairy commodity prices and currency movements have had a dramatic downward effect on company sales values.”
© FoodBev Media Ltd 2018
World Food Innovation Awards open for early bird entries!
Have a Food product worthy of an innovation award? Then you’re invited to enter the World Food Innovation Awards. Early bird entries submitted before 21 December receive a £55 discount.
Don’t delay – enter here today!