June 28, 2012

 

Danone ups stake in Centrale Laitiere

 

 

Danone has increased Western dairy groups' involvement in developing markets through an investment of US$680 million for control of Morocco's top dairy group, Centrale Laitiere.

 

Danone, which has held a 29% stake in Centrale Laitiere since 2001, raised its ownership to 67% by buying shares from Societe Nationale d'Investissement, the Moroccan investment fund.

 

The French-based said that the deal, which values Centrale Laitiere's equity at some US$2.2 billion, "represents a key step in Danone's development in Morocco", which, with a population of more than 30 million, represents a substantial market.

 

Indeed, the deal will allow Danone "to invest more in a market with major potential", the company said.

 

It added that "the move also confirms the strategic appeal of markets in North Africa for Danone".

 

Many Western dairy groups are seeking entries to developing country dairy markets, with this month alone, seeking Netherlands-based FrieslandCampina wrap up a takeover of the Philippines' Alaska Milk, while Arla unveiled an equity stake in Chinese giant Mengniu.

 

New Zealand's Fonterra, the world's biggest dairy exporter, has also unveiled a focus on emerging markets which will see it ramp up milk production in China.

 

Danone itself two years ago, sealed a tie-up with Unimilk to beef up in the Russian dairy market, into which PepsiCo gained entry through the purchase of Wimm-Bill-Dann six months later.

 

Centrale Laitiere handles some 60% of the milk processed industrially in Morocco, although some 40% of milk is consumed through the informal market, according to estimates from the United Nations Food and Agriculture Organization.

 

Centrale Laitiere's operations are based around five plants, which specialise in different products, such as pasteurised milk, yoghurt or cheese.

 

Morocco - unlike neighbouring Algeria, which has a similar-sized population - is not a major dairy importer, having imposed hefty tariffs which have encouraged the growth of domestic production, which has growth to some 1.5 million tonnes from about one million tonnes at the turn of the century.

 

Other foreign companies, with a presence in the market, include Switzerland's Nestle, which processes some 7% of industrial dairy volumes, and is present mainly in higher-value segments such as ice cream.