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Archive for Danone

Global Dairy Top 20 Report: How Strategic Shifts and Modest Gains Are Shaping the Future of the Dairy Industry

Monday, August 26th, 2024

Discover how modest gains and strategic shifts are shaping the dairy industry’s future. Read more.

Summary: Are you curious about the latest trends in the global dairy industry? RaboResearch’s annual Global Dairy Top 20 report reveals a year marked by modest gains and strategic shifts among the world’s leading dairy companies, with a 0.3% increase in combined turnover in US dollar terms, a significant drop from the previous year’s 8.1% growth. Lactalis continues to dominate, while Nestlé has leapfrogged Dairy Farmers of America due to fluctuating milk prices. Due to favorable foreign exchange changes, Mexico’s Grupo Lala debuted in the top 20. The report also highlights limited M&A activity, with upcoming deals poised to reshape the industry’s landscape. The dairy industry continues to experience limited merger and acquisition (M&A) activity, with Danone’s divestment of Russian business and the shedding of its Horizon Organic and Wallaby brands being notable exceptions. Insights into these strategic shifts and modest gains offer essential information for any dairy industry stakeholder.

  • Global Dairy Top 20 report shows a 0.3% increase in combined turnover for leading dairy companies in US dollar terms.
  • Lactalis remains the number one dairy company for the third year.
  • Nestlé climbs to second place, surpassing Dairy Farmers of America due to weaker milk prices.
  • Grupo Lala makes its debut in the top 20, driven by strong organic growth and favorable foreign exchange rates.
  • Mergers and acquisitions activity remains limited, with notable exceptions like Danone’s divestments.
  • Upcoming deals, including Unilever’s ice cream business divestment, suggest potential industry rankings changes.
RaboResearch, Global Dairy Top 20, financial health, strategy developments, market dynamics, dairy industry, turnover, Lactalis, record revenue, Grupo Lala, mergers and acquisitions, Nestlé, Dairy Farmers of America, milk costs, competitive, core competencies, smart acquisitions, Grupo Lala, Mexican dairy company, foreign currency, organic revenue growth, M&A activity, Danone, sustainability, long-term development, dairy farmers, industry stakeholders, market plans, prospects, development, stability.

How do the leading dairy sector firms handle these difficult times? The RaboResearch Global Dairy Top 20 study is now out, providing an intimate look at the highs and lows of the world’s biggest dairy firms. This yearly study focuses on the financial health, strategy developments, and market dynamics affecting the sector.

This year’s figures, while reflecting the present environment, also underscore the dairy industry’s resilience. Despite a modest 0.3% increase in combined turnover, a sharp contrast to the previous year’s 8.1% rise, the industry continues to navigate challenges. From fluctuating foreign exchange rates to developing mergers and acquisitions (M&A) activity, these insights are critical for anybody involved in dairy production and sales.

Here are some essential highlights you should not miss:

  • Lactalis has kept the top rank for the third consecutive year with record revenue.
  • Grupo Lala entered the Top 20, boosted by positive FX developments.
  • M&A activity remains muted but strategic, with several important anticipated transactions.
  • Dairy firms in the United States prioritize internal development, with more than USD 7 billion set aside for new facility building and expansion.

“The Global Dairy Top 20 report is an invaluable resource for understanding the broader trends impacting the dairy sector worldwide,” according to an analyst at RaboResearch.

Stay with us as we investigate what these results indicate for your company and how you may adjust to the industry’s changing environment.

Global Dairy Industry: Modest Gains and Strategic Shifts Highlighted in 2023 Report

RaboResearch’s annual Global Dairy Top 20 study indicates a year of moderate advances and strategic moves in the dairy industry. The total sales of the world’s biggest dairy firms increased by 0.3% in US dollars, a dramatic contrast to the previous year’s 8.1% gain. While reduced milk prices in 2023 significantly slowed revenue growth, the industry’s potential for growth remains high. This slump mainly impacted European cooperatives, with seven firms globally reporting reduced sales in their currencies.

Furthermore, the year saw little merger and acquisition (M&A) activity, contributing to moderate growth. Compared to past years, when strategic acquisitions often supported growth, 2023 saw fewer. The limited M&A activity mirrored a more significant industry trend in which corporations refocused on core activities rather than extending their portfolios. This strategic recalibration offers a comprehensive picture of the industry’s current state and its cautious confidence about the future.

Lactalis Leads the Pack 

Lactalis did it again! For the third year, the French dairy behemoth tops the Global Dairy Top 20 list. How did they do this? By exceeding USD 30 billion in yearly dairy-related income, a record for any dairy firm.

Lactalis’ success is based on two fundamental pillars: organic expansion and intelligent acquisitions. They’ve extended their footprint in developed and developing regions, capitalizing on global demand for dairy products. This technique has increased revenue and strengthened their market position.

In addition to its organic solid development, Lactalis has successfully negotiated the acquisition environment. Over the years, they’ve made significant acquisitions to expand its product line and geographical reach. Their strategic acquisitions have increased value, allowing them to retain a solid competitive advantage.

So, what lessons can other firms take from Lactalis? Focus on developing your core competencies while open to smart acquisitions that provide long-term advantages. Lactalis has perfected the delicate balance required to remain ahead of the curve.

Nestlé Climbs, DFA Slides: The FX Factor

While Lactalis remained at the top, Nestlé and Dairy Farmers of America saw significant rank shifts. Nestlé, for example, rose to second position, mainly aided by lower milk costs. Dairy Farmers of America, on the other hand, dropped to third place, indicating the same financial challenges.

But what triggered these changes? The shifting foreign currency (FX) rates had a significant effect. The value of the US dollar fluctuated, affecting the income of these worldwide titans. For Nestlé, good FX movements mitigated the impact of reduced milk prices, allowing them to retain excellent sales in USD. Dairy Farmers of America were not as lucky since lower domestic milk prices hurt hard, and any prospective FX advantages were insufficient to preserve their former position.

The complicated interaction between milk prices and foreign exchange rates explains how global variables may impact localized results. Keeping an eye on these developments is more important than ever to be competitive in the worldwide dairy industry.

Grupo Lala Joins the Global Elite: A Triumph of Strategy and Strength

Grupo Lala of Mexico has made its maiden appearance in the Global Dairy Top 20, a significant achievement. What propelled them to this top list? A mix of favorable foreign currency (FX) developments and organic solid revenue growth. The Mexican peso’s 11.8% increase versus the US dollar significantly impacted this situation. Grupo Lala had a 6% increase in organic sales growth in Mexican pesos, propelling their performance and ousting Ireland’s Glanbia off the list. This result emphasizes the value of local market strength and careful budget management. Are you intrigued by the tactics they used? It’s an enthralling account of negotiating the intricate global dairy market.

Refocusing for the Future: A Strategic Shift in Dairy M&A Activities

The dairy business continues to see modest merger and acquisition (M&A) activity. Danone’s recent divestiture of its Russian operations and discontinuation of its Horizon Organic and Wallaby brands are significant instances. Why is there this restraint? It is part of a more important trend in which corporations concentrate on their core activities, striving for more simplified processes and better efficiency.

For example, Danone is not alone in its strategy adjustment. Many dairy companies are returning to basics, eliminating less lucrative or non-core sectors. This tendency indicates a desire to focus on what they do best: producing high-quality milk, cheese, and other dairy products. It represents a shift towards sustainability and long-term development.

While this may result in fewer dramatic headlines about industry-changing acquisitions, it indicates a thoughtful recalibration geared at long-term performance rather than fast benefits. Understanding this transformation enables dairy farmers and industry stakeholders to integrate with more extensive market plans and capitalize on new prospects for development and stability.

Ready for Some Industry Shake-Ups? 

Consider impending transactions that might significantly alter the Global Dairy Top 20 standings:

Unilever’s Ice Cream Exit 

Unilever is one of the big players making headlines. They intend to offload their ice cream company, which might have far-reaching consequences. Consider the scaling prospects for an acquired firm! This change underscores Unilever’s approach of focusing on its core capabilities, possibly opening up more market space for current and new dairy giants.

Fonterra’s Core Focus 

Then there’s Fonterra, which is planning to exit its consumer business. They’re getting back to basics and focusing on their core activities. This strategic choice reflects a broader industry trend: businesses are narrowing their focus to create more excellent value and adapt to changing market circumstances.

Sustainability and Strategic Pivots 

These developments point to a broader narrative: an industry realigning itself. Sustainability has become more critical in these strategic pivots. As Unilever and Fonterra alter their sails, they navigate market movements and an increasing need for sustainable operations.

What does this mean to you? Maintain a watchful eye on the industry scene. These transitions might lead to new collaborations, inventions, and market positioning possibilities. Who will come out on top next? Only time will tell.

US Dairy Industry’s Interior Makeover: Is Bigger Always Better?

When it comes to US dairy firms, they are altering gears. Instead of pursuing acquisitions, they’re focusing their efforts internally. Consider this a primary home renovation job. With more than $7 billion set aside for new plant development and expansions from 2023 to 2026, the emphasis is squarely on increasing production capacity, particularly in cheese. This internal growth strategy demonstrates a commitment to improving operations and responding to market needs.

The Bottom Line

This year’s Global Dairy Top 20 study highlights moderate improvements and smart reorganizations. Lower milk prices and little M&A activity have led many businesses to prioritize internal development and core operations. Significant firms like Lactalis and Nestlé dominate, while newcomers like Grupo Lala make noteworthy debuts. Upcoming transactions and strategic pivots indicate that the dairy landscape may soon evolve.

Dairy farmers must remain aware of these developments. Strategic adjustments, particularly those involving mergers and acquisitions, have the potential to alter market dynamics drastically. Are you prepared to adapt and prosper amid these changing trends? The dairy industry’s future will provide problems and possibilities; you’re ready to seize them.

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German Dairy Crisis: Nationwide Strike Looms as Wage Talks Falter

Monday, July 22nd, 2024

Will German dairy workers’ wage talks avert a nationwide strike? Discover the stakes and potential impacts on the industry as negotiations reach a critical point.

Germany’s dairy industry, an essential element of the country’s agricultural economy, is now facing the possibility of a statewide strike owing to delayed pay discussions. This impending disruption jeopardizes thousands of farmers’ livelihoods and consumers’ critical supply of dairy products. Currently, 19,000 workers at 28 dairy and cheese companies in Bavaria are participating in ‘warning strikes,’ laying the groundwork for more extensive measures if discussions fail. Major industry giants such as Danone, Ehrmann, and Nestlé are at a crucial point, with just hours till the next round of discussions. These choices will affect the dairy ecosystem, from factory workers to farmers, influencing everything from supply chains to milk pricing in a volatile market.

CompanyOffered Wage Increase (Year 1)Union Demand (Monthly)Current Impact
Danone€150€41130 shifts paralyzed
Ehrmann€150€41125 shifts paralyzed
Nestlé€150€41135 shifts paralyzed

The Crescendo of Discontent: Escalating Tensions and Strategic Labor Actions in Bavaria

The buildup to this probable statewide strike comes from weeks of rising tensions and labor actions by dairy workers in Bavaria. These ‘warning strikes,’ which included 19,000 workers from 28 dairy and cheese manufacturers, were a forceful protest to win higher salaries. They purposefully interrupted over 90 shifts, resulting in substantial production downtime and financial loss. By stopping operations, the union demonstrated its power to organize and compel employers, laying the groundwork for essential pay discussions. Each warning strike has increased urgency, emphasizing the fundamental divisions in the German dairy industry.

Power Players at the Bargaining Table: The NGOs and Corporate Giants Shaping Germany’s Dairy Future

The Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) is essential to these contentious discussions, with the food trade union strongly lobbying for the workers. Mustafa Öz is a crucial individual who articulates demands and strategizes labor activities. Major dairy corporations like Danone, Ehrmann, and Nestlé represent employers. These industry titans are critical in determining the sector’s economic environment via wage reactions and negotiating tactics. The conversation will likely impact worker relations in Germany’s dairy sector.

A Call for Fairness: Advocating Equitable Wage Distribution in Germany’s Dairy Sector

The union’s proposal for a €411 monthly salary rise per employee stems from a desire to promote industry fairness. Mustafa Öz and NGG emphasize the need for a fixed rise in narrowing the income disparity. By winning a significant salary increase, the union hopes to assure steady financial improvements for all workers, especially those in lower-paid areas such as manufacturing and warehousing. This requirement is intended to establish a more balanced and equal economic environment. Furthermore, the €411 number tackles growing living expenses and inflation, acting as a buffer against economic stress and a step toward enhancing the quality of life for dairy workers.

Employers’ Strategic Counter-Offer: Balancing Immediate Relief and Long-Term Fiscal Prudence

Employers reacted with a counter-offer that included two years of incremental wage increases: a fixed €150 rise in the first year and a 2.5% hike the following year. This method seeks immediate financial comfort while promoting progressive pay increases and balancing employee demands with economic discipline.

Clock Strikes Tense: Imminent Deadline Fuels Heated Wage Negotiations in Germany’s Dairy Sector

The present stage of discussions is quite heated, with a tangible feeling of urgency. As negotiations reach their third crucial phase, Mustafa Öz, the primary negotiator and regional chairman of NGG Bayern, has highlighted the essential aspect of the following discussions. “We are sending a clear message to the employers: just a few hours remain before the next meeting at the collective bargaining table. Öz added that warning strikes would continue until a fair agreement is reached. The union asks for a significant monthly salary rise of €411 ($447) per employee, contrasting with the employers’ cautious offer. This deadlock might lead to a full-scale industrial strike. The union’s demands for equal pay distribution, especially for lower-paid workers, provide a moral dimension to the discussions. As deadlines approach, the union’s haste highlights the importance of these negotiations for the future of Germany’s dairy business.

The Ripple Effect: Unveiling the Far-Reaching Impact of Prolonged Labor Disruptions in Germany’s Dairy Industry

The consequences of these warning strikes have considerably affected production operations, resulting in the shutdown of nearly 90 shifts. This suspension in operations has caused significant financial hardship for the firms, resulting in immediate revenue losses and unfulfilled production limits. Inefficiency has a cascade effect on supply chain fulfillment, startup costs, idle labor compensation, and possible fines for failing to meet contractual commitments. The combined effect of these continuous strikes jeopardizes the stability and predictability required for the dairy industry’s economic sustainability.

Nationwide Strike Looms: An Escalating Crisis for Germany’s Dairy Industry

The German dairy sector might face a catastrophic statewide strike if talks fail. Building on the earlier ‘warning strikes,’ this might interrupt operations at dairy and cheese plants, slowing output and increasing supply chain concerns. With over 19,000 workers poised to strike, the consequences would be far-reaching. Immediate shortages of dairy goods in supermarkets and severe financial losses would put pressure on allied businesses such as retail and transportation. The disruption might result in waste and a storage backlog, further affecting operations.

Consumer prices may increase as more extraordinary manufacturing expenses are passed down. The economic burden may pressure the administration to reconsider austerity measures and agricultural policy. The strike may inspire similar strikes in other areas, causing industrial turmoil across Germany. Finally, this might drive all stakeholders in the dairy business to address long-standing challenges, such as pay fairness and production costs, crafting a more sustainable future for the sector.

The Bottom Line

The stakes are very high since the German dairy sector is on the verge of a statewide strike. The continuing wage conflicts and company counter-offers need prompt action. These discussions will influence the future of labor relations and production efficiency in this critical industry. The planned talks are crucial for settling existing issues and establishing a precedent for future industry standards. Union leaders and business executives’ decisions will influence the whole sector, from factory floors to distribution networks. Both parties must emphasize long-term stability and fair progress above short-term profits. This labor unrest will impact legislative choices, market circumstances, and the future of Germany’s dairy sector. Stakeholders carefully monitor the situation, looking for a solution that fosters justice, sustainability, and mutual prosperity.

Key Takeaways:

  • German dairy industry facing potential nationwide strike due to unresolved wage negotiations.
  • Recent wave of ‘warning strikes’ has disrupted production in 28 dairy and cheese factories.
  • Food trade union NGG demands a significant monthly wage increase of €411 per employee.
  • Employers counter with a €150 fixed increase for the first year and a 2.5% increase in the second year.
  • Third round of wage negotiations scheduled with major dairy companies like Danone, Ehrmann, and Nestlé.
  • Union emphasizes the urgency of negotiations, continuing strikes until an agreement is reached.
  • Strikes could have a far-reaching impact on labor relations and production dynamics in the dairy sector.

Summary:

Germany’s dairy industry is on the brink of a statewide strike due to delayed pay discussions, potentially threatening thousands of farmers’ livelihoods and consumers’ critical supply of dairy products. 19,000 workers at 28 dairy and cheese companies in Bavaria are participating in warning strikes, with major industry giants like Danone, Ehrmann, and Nestlé at a crucial point. The Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) is crucial to these discussions, with Mustafa Öz advocating for workers. The union proposes a €411 monthly salary increase per employee to promote industry fairness and ensure steady financial improvements for all workers, particularly those in lower-paid areas like manufacturing and warehousing. Employers have responded with a strategic counter-offer of two years of incremental wage increases, aiming to provide immediate financial comfort while promoting progressive pay increases and balancing employee demands with economic discipline. The union’s haste highlights the importance of these negotiations for the future of Germany’s dairy business.

Learn more:

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Mid-Year 2024 Global Dairy Business Review: Key Developments from January to June

Tuesday, July 9th, 2024

Explore the pivotal global dairy business events from January to June 2024. Keep up with essential mergers, expansions, and executive appointments. Ready to delve in?

In the dairy business, developments happen quickly, influencing markets from the Midwest of America to Southeast Asia. The first half of 2024 was no different, with mergers, acquisitions, and expansions shaping the global dairy landscape. You’ve come to the right place if you want to stay ahead. This summary retrospectively looks at significant industry events from January to June 2024. Tracking these developments is about more than just who’s merging or expanding. It’s about understanding trends that drive the industry and anticipating shifts that could impact your business. Every executive change and market strategy plays a role in the bigger picture. 

January 2024: A Month of Strategic Moves and Expansion in the Dairy Industry

January 2024 witnessed significant movement in the dairy industry. Among the top executive changes, Molly Pelzer, CEO of Midwest Dairy, announced her retirement effective March 2024, while Lino A. Saputo of Saputo Inc. received the prestigious Order of Canada. Strategic mergers and acquisitions also marked the month: Ornua Nutrition Ingredients sold its UK powder blending and manufacturing business to Roger Wertheim-Aymes. Danone struck a deal to sell its Horizon Organic and Wallaby businesses to Platinum Equity. 

Expansion was the theme for several companies. Domino’s outlined an ambitious plan to add over 1,100 new stores annually, and Pizza Inn signed a franchise agreement to establish 50 new locations in Saudi Arabia. Natural Organic expanded its footprint into Vietnam and Thailand, and Lakeland Dairies announced capacity upgrades at its Killeshandra fluid milk facility. The Chinese dairy sector saw the commencement of operations at the National Dairy Innovation Center. 

Japan’s Meiji nearly doubled its investment in Danone’s infant formula facility in Ireland, underscoring a trend of international growth among Irish dairy companies, including moves by Lakeland Dairies and Danone to expand their global reach.

February 2024: A Flurry of Strategic Business Moves, Investments, and Growth Initiatives in the Global Dairy Sector

February 2024 saw significant strategic moves, partnerships, and investments in the global dairy sector, underscoring growth and market expansion. 

Global investment firm Cathay Capital partnered with French dairy company Savencia Fromage and Dairy to boost Savencia’s presence in China. This collaboration involves Cathay investing in Savencia’s Chinese brand Baijifu, which offers over 50 cheese and dairy products. Cathay will focus on product innovation, brand development, sales expansion, and supply chain management to tap into China’s dairy potential. 

Russian dairy producer EkoNiva Group significantly boosted its exports by opening a new office in Xi’an, China. This move aims to increase brand awareness, diversify product offerings, and leverage regional rail transport to improve supply chains. EkoNiva has been actively exporting dairy products to China, including retail UHT milk, since 2020. 

The Value4Dairy Consortium, led by Dutch dairy cooperative FrieslandCampina, received a $5 million grant from the Bill & Melinda Gates Foundation. This grant aims to bolster dairy productivity and sustainability in Nigeria, modernize the sector, and support small-scale milk production, benefiting around 40,000 producers. 

Fonterra Co-operative Group launched initiatives to enhance sustainable production. Fonterra Australia introduced the “Naked Mozz” project, eliminating over 330 tons of cardboard annually, resulting in significant cost savings. Additionally, Fonterra announced the installation of a 20-megawatt electrode boiler at its Edendale site in New Zealand to reduce emissions and the overall carbon footprint. 

Denmark-based Arla Foods entered talks to acquire the Semper facility in Sweden from Hero Group, highlighting Arla’s intent to enhance its production capabilities and optimize operations. 

FrieslandCampina continued its proactive expansion in Southeast Asia by introducing new products under its Nurture brand in Singapore and planning market entries in Malaysia, Indonesia, and Thailand. The company targets active professionals with probiotic drinks. 

In executive leadership changes, Irish dairy cooperative Ornua appointed Lindsay Brady as President of Ornua Foods North America, underscoring its strategic growth plans for the U.S. and Latin America. 

February 2024 demonstrated the global dairy sector’s dynamic and competitive nature through robust investments, key partnerships, and strategic market expansions.

March Sees Developments in Global Companies’ Revenues and Profits and Market Challenges.

As noted in their financial performance results, persistently high inflation impacted sales at many major global dairy processors in 2023. 

China driving results for a2 Milk Co. New Zealand’s a2 Milk Co. saw revenue up 3.7% and net profit after tax up 15.6% in its 2024 half-year results, thanks to solid performance in China. Despite higher costs and fewer births, a2 posted a 1.5% growth in total IMF sales but cautioned about challenging market conditions ahead. 

Dairy Ireland weighs on Kerry Group results. Kerry Group’s 2023 revenues dropped by 8.6% to €8.020 billion (about US$8.7 billion), attributed to falling sales and volumes in Dairy Ireland. The unit experienced constrained supply and elevated input costs. CEO Edmond Scanlon mentioned focusing on emerging markets and sustainable nutrition as key differentiators. 

“Difficult year” for FrieslandCampina. FrieslandCampina’s revenue fell 7.1% to €13 billion (about US$14 billion), driven by unfavorable currency effects and declining consumer market volumes due to high inflation. Operating profit plummeted 84.1%. CEO Jan Derck van Karnebeek highlighted the tough year and anticipates slightly growing demand but increased costs due to geopolitical instability. 

Solid results for Danone. Danone’s 2023 revenue rose 7% to €27.6 billion (about US$30 billion), driven by a 7.4% price increase and growth in its essential dairy and plant-based protein business. CEO Antoine de Saint-Affrique cited progress and development, particularly in China and North Asia. The company expects inflation to ease and sales growth of 3% to 5% this year. 

Dairy and Infant Nutrition grow for Nestlé. Nestlé reported a 1.5% decrease in total sales to CHF93 billion (about US$106 billion). However, infant nutrition and dairy showed bright spots with high single-digit growth. CEO Mark Schneider credited increased marketing and investments for the company’s growth despite inflation. Nestlé expects organic sales growth of around 4% in 2024.

April Proved to Be a Dynamic Month with Several Noteworthy Developments Shaping the Global Dairy Industry 

April was a dynamic month with several noteworthy developments shaping the global dairy industry. Here are the key highlights:

Fonterra’s Strategic Moves: New Zealand’s Fonterra announced the closure of two Waikato processing plants to boost high-value product production. This shift includes closing the Waitoa specialty powders site and two dryers at Te Rapa, focusing more on specialty nutrition dryers and UHT plants. 

Westland Milk Products’ Financial Gains: Westland Milk Products, owned by China’s Yili Group, reported a record profit of NZ$56 million. Strong sales of high-value products like butter and strategic international partnerships with retailers like Walmart and Costco drove success.

Cutting-Edge Collaborations: FrieslandCampina Ingredients and Triplebar Bio Inc. teamed up to produce lactoferrin through precision fermentation, meeting the growing global demand for this protein.

New Plant Investments: Meiji celebrated its new $90-million ice cream plant in Shanghai. Fonterra’s Anchor Food Professionals also announced a distribution switch to penetrate the Chinese bakery sector more deeply.

Ongoing Technological Expansion: Fonterra’s new application center in Wuhan, China, will be operational in September. It will leverage new technologies to boost dairy product quality.

Acquisitions and Strategic Divestments: Italy’s Sabelli acquired Stella Bianca to expand its dairy segment. Saputo revealed several U.S. plant closures as part of its Global Strategic Plan.

Innovative Approaches in Dairy Nutritional Products: Nestlé China introduced Yiyang Wanning, a milk powder to improve sleep, while Japan’s Meiji launched Eye and Sleep W Support, which claimed to aid eye health and sleep.

Carbon Reduction Initiatives: General Mills announced a plan to reduce methane emissions on dairy farms by 40% by 2030. Their Climate Transition Action Plan focuses on regenerative agricultural practices and supports the Dairy Methane Action Alliance.

May 2024: Navigating Financial Turbulence, Strategic Shifts, and Bold Investments in the Dairy Industry 

May 2024 developments in the dairy industry highlight various financial challenges, strategic restructuring plans, market exits, and new investments. These actions are shaping the landscape for companies navigating competitive market conditions. 

Belgium-based dairy cooperative Milcobel is reorganizing following a net loss of 3.7% in 2023. Their plan includes integrating dairy units for synergy and scaling back milk powder activities by September 2024. 

Several Irish dairy companies faced hurdles in 2023. Lakeland Dairies saw a significant revenue and profit drop due to a global dairy market collapse, leading them to prioritize value-added products. Ornua and Carbery Group also faced challenges, prompting increased investments in international markets. Aurivo Dairy Ingredients noted an operational profit drop but aims to grow in Central America, Southeast Asia, and the Middle East. 

General Mills might sell its North American yogurt business, including Yoplait, potentially valued at $2 billion. This signals a strategic recalibration. 

In China, Yili Industrial Group reported a record-breaking $17.6 billion operating income for 2023, thanks to innovations like advanced lactoferrin extraction technology. Yili aims to leverage these advancements to enhance its market leadership. 

Pizza Hut China launched a Pizza Burger to cater to young, single consumers, reflecting a strategic diversification to capture niche markets. 

On sustainability, Mars Inc. initiated a plan to cut GHG emissions by 50% by 2030. Partnering with FrieslandCampina, Mars will focus on sustainable feed production and manure management. 

Dale Farm announced a £70 million investment in its cheddar processing facility to boost production capabilities and meet rising demand. 

These developments show that while the global dairy industry faces challenges, companies are actively restructuring, investing in innovation, and adopting sustainable practices to thrive in the evolving market landscape.

June 2024: Significant Developments Shaping the Global Dairy Industry 

June saw notable developments in the global dairy industry. As Synlait Milk faces financial difficulties, over half of its suppliers plan to cease milk supply. At the same time, the company looks to sell its manufacturing plants and consumer Dairyworks business to reduce debt. A vote on a NZ$130 million loan from major shareholder Bright Dairy is pending.

On the expansion front, Dutch Lady Milk Industries Berhad (a subsidiary of Royal FrieslandCampina) opened a new plant in Malaysia, which is set to double production capacity and achieve sustainability goals. Similarly, Idaho-based Suntado celebrated opening a new production facility in Burley, which can handle over 450 MT of raw milk daily, with future expansions on the horizon. 

Corporate moves included Müller UK & Ireland’s acquisition of Yew Tree Dairy, positioning Müller for growth in the powdered milk market. Ireland’s Lakeland Dairies aims to sell its shuttered Banbridge site, and Oatly abandoned plans for its first UK beverage facility, opting to utilize European sites instead. 

In executive news, Clover Sonoma appointed John Coletta as the new CEO. Meanwhile, DMK Group announced plant closures due to lower milk volumes. Financial highlights came from Saputo, which reported a rise in revenues but a drop in net earnings for FY 2024, and Yakult Honsha announced plans for a new factory in the Philippines to meet rising demand.

Campbell Soup Co. decided to sell the Noosa yogurt brand, and Fonterra planned a new application center in China. Danone and Michelin collaborated with DMC Biotechnologies to accelerate precision fermentation developments. Lastly, Oceania Dairy reported losses, and Bidcorp U.K. acquired Northern Bloc Ice Cream, marking notable market activities in June 2024.

The Bottom Line

The first half of 2024 has highlighted the fast-paced and ever-changing nature of the global dairy industry. Dairy companies worldwide have shown agility and resilience through strategic shifts, mergers, acquisitions, expansions, and product innovations. This period marked critical leadership transitions, significant investments in technology and sustainability, and ongoing market challenges shaping the sector. Key trends include a focus on healthy eating, sustainability efforts, and growth in emerging markets. Companies like Nestlé, Fonterra, and Danone are leading efforts in methane reduction, innovative products for specific health benefits, and strategic market expansions. The industry’s dynamic nature underscores the importance of staying updated with comprehensive insights and analyses. As we continue through 2024, monitoring these developments is crucial to adapt to the rapidly evolving dairy market. This review provides invaluable insights for industry stakeholders, stressing the need for continual adaptation and informed decision-making. 

Key Takeaways:

  • Leadership Changes: Key appointments and retirements mark shifts in leadership across various companies like Midwest Dairy and Saputo Inc.
  • Mergers & Acquisitions: Notable mergers include Wasoko and MaxAB in Africa, while prominent acquisitions involve Ornua Nutrition Ingredients in the UK.
  • Global Expansion: Companies like Nutura Organic and Danone are expanding their footprints into new markets such as Vietnam, Thailand, and the U.S.
  • Innovative Trends: FrieslandCampina Ingredients and others are focusing on consumer health with trends like sustainable nutrition and gut health advancements.
  • Environmental Initiatives: Investments in reducing carbon footprints and increasing sustainability, as seen with Lactalis and Fonterra.
  • Financial Performance: Reports reveal a mix of gains and losses influenced by market conditions, inflation, and strategic investments.

Summary:

In the first half of 2024, the global dairy industry witnessed a dynamic mix of strategic moves, mergers, acquisitions, expansions, and notable executive changes. Key highlights include Midwest Dairy CEO Molly Pelzer announcing her retirement, Saputo Inc.’s recognition with the Order of Canada, and significant investments from companies like Danone and Lactalis in renewable energy and operational expansions. Domino’s ambitious growth plans further spotlight the sector’s momentum, while regional industry trends emerged with strong initiatives from Nutura Organic in Southeast Asia and modern farming strategies from FrieslandCampina in Nigeria. As dairy companies navigate a challenging landscape marked by evolving consumer preferences and sustainability goals, the first half of the year set a robust foundation for continual growth and innovation.

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Global Dairy Industry First Half 2024: Key Events, Mergers, and Market Trends

Sunday, July 7th, 2024

Learn about important events, mergers, and market trends in the global dairy industry for the first half of 2024. How are companies changing to meet new consumer demands?

With new technology developments, market swings, and strategic mergers and acquisitions driving fast change in the global dairy sector, Important events on many continents in the first half of 2024 have molded the direction of the industry. These phenomena point to more general trends and economic transformations from leadership transitions to creative sustainability initiatives. This thorough study explains how these developments affect consumer tastes and world marketplaces. We address essential events like Danone’s strategic sale of Horizon Organic and Wallaby premium dairy businesses and Molly Pelzer’s resignation from Midwest Dairy. Knowing these changes is necessary as the dairy sector significantly affects local farmers and foreign commerce. Maintaining knowledge of these critical events helps you understand present market circumstances and prepare for trends influencing consumer behavior and corporate plans.

January’s Dairy Delight: A Month of Pivotal Strategic Moves and Groundbreaking Sustainability EffortsJanuary witnessed a flurry of global activity in the dairy sector. In the USA, Midwest Dairy CEO Molly Pelzer announced her retirement in March 2024, while Archer-Daniels-Midland, after acquiring Revela Foods, bolstered its presence in dairy products.

January also saw the formation of strategic alliances in the dairy sector. Cathay Capital joined forces with Savencia Fromage and Dairy to enhance Savencia’s market position in China, while Pinlive Foods in China commenced cheese manufacturing at their new Shanghai plant. Similarly, Natural Organic in Australia expanded its operations in Vietnam and Thailand through strategic alliances.

Volac International sold Denkavit, its milk replacer company, in Europe. At the same time, Danone agreed to transfer its Horizon Organic and Wallaby brands to Platinum Equity. Lactalis built a solar power facility in Verdun to help reduce CO2 emissions. This commitment to sustainability is a positive sign for the industry’s future. At the same time, Irish business Lakeland Dairies extended its Killeshandra factory. FrieslandCampina, with an eye on sustainability, released a paper on critical dietary trends in 2024.

While Danone intended to close its Parets del Vallès facility in Spain, PAG Private Equity bought a share in Latvia’s Food Union Europe. Meiji quadrupled its outlay on the Danone Wexford, Ireland facility. Danone also made €100 million investments in Mexico and guaranteed NotCo’s rights to use “milk” on Chilean labels.

Targeting higher production capacity, Imagindairy started operations in Israel using modern precision fermentation lines. Emphasizing sustainability, market growth, and technical developments, these acts show a vibrant beginning to 2024.

February’s Flourish in the Dairy Sector: Strategic Expansions, Sustainability, and Leadership Shifts

February featured notable developments across the dairy sector, marked by strategic expansions, environmental projects, packaging innovations, mergers, and leadership changes.

EkoNiva Group expanded into Xi’an, China, to increase dairy exports through improved brand awareness and logistics.

With the Value4Dairy consortium—led by FrieslandCampina—securing a $5 million grant from the Bill & Melinda Gates Foundation to improve Nigeria’s dairy output and sustainability, Africa achieved progress in sustainability.

Australia and New Zealand improved their efforts at sustainability. Fonterra’s “Naked Mozz” project in Australia removed cardboard packaging, cutting waste and expenses for their Perfect Italiano Mozzarella cheese. Fonterra proposed a 20-megawatt electrode boiler for its Edendale facility in New Zealand to reduce emissions.

In the USA, the sudden closing of the Kansas Dairy Ingredients (KDI) factory in Hugoton was a significant event. Ornua signaled a strategic change by appointing Conor Galvin as its new CEO.

Europe was very active. Arla Foods started negotiations to buy the Semper facility in Sweden, indicating possible expansion. Emmi Group credited critical markets like the USA and Italy for their consistent income and profit gains. With an eye toward plant-based yogurt to satisfy changing customer tastes, Danone rebuilt a factory in France.

These events underline the dynamic character of the dairy sector, which is defined by strategic advancements, sustainability pledges, and leadership changes—all meant to fit and flourish in a fast-changing global market.

March’s Strategic Realignments and Financial Recap in the Dairy Industry

In the dairy industry, March was a time for strategic choices and financial recalibrations covering Europe, Australia, New Zealand, and India. FrieslandCampina’s income dropped 7.1% to €13 billion ($14 billion). Still, operating profit dropped dramatically to €75 million in Europe primarily due to market problems and currency effects. On the other hand, Savencia Fromage & Dairy reported a 3.7% sales rise to €6.8 billion despite a drop in operating profit to €212.9 million brought on by changing raw material and energy prices.

Arla Foods in Denmark said they will close a failing factory by 2025, moving cheese manufacturing to a more effective operation in Taulov. Under geopolitical and internal changes, Danone revealed a strategic divestment—selling its Russian business for RUB 17.7 billion ($192 million). Driven by developments in dairy and plant-based proteins, the firm also announced a 7% sales rise to €27.6 million ($30 million) for 2023.

With financial difficulty in the southern hemisphere, New Zealand’s Synlait Milk Ltd. missed a crucial loan payment and recorded a net loss of NZD 96 million ($57 million) for the first half of 2024. Fonterra reacted by shutting older operations to concentrate on more valuable output. Australia saw fresh investments and closures: Bega Cheese shuttered its Betta Milk and Pyengana factories. Beston Global Food Co. also revealed at the same time a net loss of AUD 18.8 million ($12.4 million). Lactalis, on the other hand, showed dedication to efficiency; it shuttered its Echuca facility but invested AUD 85 million ($56 million) in its Victorian supply chain over three years.

Driven by a robust distribution system and value-driven products, Amul, under Jayen Mehta’s direction, sought worldwide growth and unheard-of income in India.

These advances highlight the dairy sector’s resilience, constant strategic realignment, and commitment to innovation and expansion.

April’s Momentum in Dairy: Strategic Collaborations, Financial Triumphs, and Operational Overhauls

April saw significant developments in the global dairy industry. Together, Qatar and Algeria helped increase the yearly output of powdered milk by 200,000 tons. Danone started the liquidation of DanoneBel in Belarus after asset seizures in Europe.

With a 9% growth, India’s Amul Dairy oversaw Rs 12,880 crore during the fiscal year 2023-24. While China Shengmu’s net profits sharply declined despite an increase in income, Modern Farming Group improved raw milk sales in China.

Australia and New Zealand faced both strategic developments and difficulties. Synlait Milk got a debt payback extension despite continuous problems. To concentrate on higher-value goods, Lactalis streamlined its activities while Fonterra eliminated two processing facilities. Thanks to Yili Group’s investments, Westland Milk Products declared record earnings.

While Saputo saw a little income gain combined with a notable decline in net profit, Royal Milk was approved in Canada to begin manufacturing baby formula.

May’s Strategic Shifts and Ambitious Investments: Boosting Efficiency, Expanding Capacities, and Driving Innovation in Dairy

Valio shuttered two manufacturing plants and relocated activities to Riiheimäki in Europe to improve efficiency. Declining milk yields caused Dairygold to cut cheese output. Arla Foods Ingredients bought Volac, therefore enhancing its sports nutrition range. Kerry Group also established a cheese facility in Charleville to increase production with government backing. At last, FrieslandCampina moved its UK headquarters and opened a new technological center in Malaysia.

Up 9% from last year, Amul Dairy revealed a record turnover of Rs 12,880 crore in 2023–24 in India.

Daisy Brand spent $708 million on a new facility in Boone, Iowa, generating 255 jobs in the United States. While Walmart is establishing a milk processing factory in Robinson, Texas, Oberweis Dairy will shut its North Aurora operation after bankruptcy. Darigold named Allan Hattum chief executive. General Mills is considering selling its North American yogurt company—including Yoplait—for about $2 billion. Mars Inc. started a $47 million project on environmentally friendly dairy farming. Nestlé sold Grupo Gloria its Cayambe, Ecuadorian plant. Danone finished acquiring Functional Formularies with Ohio bases.

Nestlé confirmed its Latin American footprint by selling Grupo Gloria its Cayambe, Ecuadorian factory. Tropicale Foods is now concentrating its output on Texas and Ontario, California, after closing its Modesto, California facility.

June’s Global Dairy Dynamics: Strategic Shifts, Facility Overhauls, and New Leadership Amid Market Challenges

Strategic actions, financial outcomes, and new facility debuts defined the transforming global events the dairy industry experienced in June. In Australia and New Zealand, the sector faced apparent difficulties. High expenses, dwindling sales, and unpaid debt for New Zealand’s Synlait Milk caused numerous suppliers to stop delivering milk. NZD 19 million ($12 million) was lost, according to Oceania Dairy. But looking for fresh guidance, Australian Dairy Nutritionals hired Mahi Sundaranathan as CEO. Two elderly Waikato facilities were closed, and Fonterra announced leadership changes. In line with its optimizing strategy, Saputo sold Coles Group Ltd.’s Australian fresh milk facility for CAD 95 million ($70 million).

Critical events in Europe included the Dutch business DL MI under Royal Friesland Campina, which was building a new dairy facility in Malaysia, tripling output capacity. Unternehmensgruppe Theo Müller’s UK business bought Yew Tree Dairy, strengthening its dry product line. It only shelved its first UK plant proposal. At the same time, German cooperative DMK Group announced closing its Dargun factory because of low milk quantities. Lactalis intended to shut down its Romanian operation and concentrate on other sites. Kerry Group expanded production by building a new cheese facility in Ireland. DMK Group bought Polish Mlekoma Dairy to increase their European activities. Ehrmann AG bought Trewithen Dairy from the United Kingdom.

Suntado opened a sizable manufacturing plant in Idaho, USA, which increased raw milk processing capacity. Focusing on cheese manufacture and improving technical capacity in Wisconsin, Saputo announced the closing of six US plants. Citing worldwide market circumstances, Saputo witnessed a 1.7% revenue gain but a 42.1% net profit drop financially.

Because of declining pricing and modest worldwide dairy demand, Saputo’s performance in Canada followed global trends with higher income but lower profitability.

Aiming for 2.8 million bottles daily, Yakult Honsha opened a new facility in the Philippines to accommodate growing demand, which is seeing growth in Southeast Asia. Fonterra intended to launch a new applications center in Wuhan, China, to increase its regional visibility by September.

The Bottom Line

Strategic activities, financial changes, and sustainability initiatives have defined the first half of 2024 in the global dairy sector as proof of resilience among changing market circumstances. Significant events include mergers, sustainable technology, market diversification, and leadership transitions, underline the dynamic character of the sector. The industry is still dedicated to strategic development, creativity, and sustainability, improving output, broadening market reach, and prioritizing sustainable practices. These changes demonstrate how actively the dairy sector determines its future in line with world sustainability objectives, using technology and changing to meet customer needs. Staying alert and creative will help stakeholders guarantee a prosperous and sustainable future in the second half of the year.

Key Takeaways:

  • Leadership Changes: Major leadership transitions occurred, including the appointment of new CEOs and strategic retirements.
  • Market Expansions: Several companies expanded their presence in new markets, including Nutura Organic’s growth in Vietnam and Thailand.
  • Mergers and Acquisitions: Noteworthy deals include ADM’s acquisition of Revela Foods and Danone’s divestment from Horizon Organic and Wallaby operations in the USA.
  • Strategic Partnerships: Partnerships like Cathay Capital’s collaboration with Savencia to bolster the latter’s footprint in China were prominent.
  • R&D Investments: Substantial investments in research and innovation, such as Valio’s “Food 2.0” project, aimed to reshape the future of food systems.
  • Sustainability Efforts: Initiatives to reduce carbon footprints, such as Lactalis’s new solar plant, highlighted the industry’s move towards sustainability.
  • Production Efficiency: Numerous companies, including Fonterra and Danone, announced plant closures and consolidations to enhance production efficiency.
  • Financial Highlights: Revenue fluctuations and profit changes were reported by major players, reflecting market conditions and strategic decisions.
  • Technological Advancements: Investments in technology and infrastructure, such as Mars Inc.’s sustainable dairy production plan, underscored the focus on innovation.

Summary:

In the first half of 2024, the global dairy sector experienced significant changes due to new technology, market swings, and strategic mergers and acquisitions. These events impacted consumer tastes and global marketplaces, emphasizing the importance of understanding current market circumstances and preparing for trends influencing consumer behavior and corporate plans. Key events included Midwest Dairy CEO Molly Pelzer’s retirement, Cathay Capital partnering with Savencia Fromage and Dairy to enhance its market position in China, Pinlive Foods starting cheese manufacturing in Shanghai, Natural Organic expanding its operations in Vietnam and Thailand, Volac International selling Denkavit in Europe, Danone transferring Horizon Organic and Wallaby brands to Platinum Equity, and Lactalis building a solar power facility in Verdun to reduce CO2 emissions. In February, the dairy sector experienced notable developments, including expansions, environmental projects, packaging innovations, mergers, and leadership changes. In April, Qatar and Algeria contributed to a 200,000-ton increase in powdered milk output. In May, strategic shifts and ambitious investments were made, including Valio shuttering two manufacturing plants, Dairygold cutting cheese output, Arla Foods Ingredients buying Volac, Kerry Group establishing a cheese facility in Charleville, and FrieslandCampina moving its UK headquarters and opening a new technological center in Malaysia.

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