July 27, 2016


Rabobank report: Dairy industry downsized


The global dairy industry's size in terms of turnover shrank last year due in large part to low commodity prices and strong US dollar and volatile currencies, according to the latest annual Rabobank survey of the world's largest dairy companies.

The 2016 Rabobank Global Dairy Top 20 2016 report said that overall, 2015 proved to be a difficult year for most companies.


"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", said Kevin Bellamy, Rabobank's global dairy strategist.


In US dollar terms, the top 20 companies posted combined dairy sales of US$194 billion in 2015, down 13% year-on-year. "It is indicative of how much the euro has weakened against the US dollar in 2015 that the same collective turnover of the top 20 improved 4% YOY in euro terms", the report said.


The report said that as growth in China slowed, Africa emerged as a new market where 14 deals were inked in 2015 and four more year-to-date in 2016. In comparison, only three deals were recorded in Africa in the whole of 2014.


"Africa is now definitely on the dairy map", the report pronounced.


Top 20 firms


As of July, the top three dairy companies retained their 2015 positions. These are Nestlé of Switzerland, Lactalis (France) and Danone (France) in that order.


Among the companies down on the list, there was "significant jostling for position", according to the Rabobank report. Fonterra (No. 4 last year) and Dairy Farmers of America (No. 5) swapped places this year, while FrieslandCampina of the Netherlands and Arla Foods (Denmark/Sweden) maintained their positions at No. 6 and No. 7, respectively.


Dairy Farmers of America's one-notch advance was helped by its full acquisition of the DairiConcepts JV, which it previously operated with Fonterra.


Yili of China went up to eighth place from No. 10, propelled by strong growth. It was the only company in the Top 12 to increase turnover in US dollar terms, the report noted.


Saputo of Canada was No. 9, down from No. 8, while Dean Foods of USA went down to No. 10 from 9th place.


Following are the rest of the companies on the Top 20 list:


-- No. 11 (unchanged)-Mengniu of China


-- No. 12 (unchanged)-Unilever (Netherlands/UK)


-- No. 13 (up from No. 16)-Kraft Heinz (USA)


-- No. 14 (down from No. 13)-Sodiaal (France)


-- No. 15 (up from No. 20)-Müller (Germany) 


-- No. 16 (down from No. 14)-DMK (Germany)


-- No. 17 (unchanged)-Meiji (Japan)


-- No. 18 (unchanged)-Schreiber Foods (USA)


-- No. 19 (down from No. 15)-Savencia (France)


-- No. 20 (new entrant)-Agropur (Canada)


The report also noted the emergence of Pakistan which, it said, is now the world's third-largest milk producer and where FrieslandCampina has taken a 51% stake in Engro, the country's second-largest dairy firm.

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