Market trends

Background last update:8 Aug 2018

Nestlé the biggest, French swap places

Nestlé remains the biggest dairy player in the world. The Swiss based company realised a dairy turnover of US$ 24.2 million in 2017, a little increase over 2016. Overall, no major changes and no new entrants are spotted in this year’s top 20 list.

This is according to Rabobank’s latest Global Dairy Top 20: A Shuffling of the Deck Chairs report. No new companies have been added to the list. According to Peter Paul Coppes, Senior Analyst Dairy at Rabobank this has to do with the difficulty to achieve the US$ 5 billion (€ 4.29 billion), due to a scarcity of large acquisitions or mergers. Most companies saw their revenue increase in 2017, compared to 2016. Except for Danone, that saw revenue decrease from € 16.6 billion in 2016 to € 15.5 billion in 2017.

French dairy companies swap places

The world’s largest food and beverage company, Switzerland’s Nestlé, reigns supreme on the list, but the gap between number 1 and number 2 has narrowed. French Lactalis swapped places with compatriot Danone and moved into second place, boosted by its acquisitions of US yoghurt businesses Stonyfield and Siggi’s. Danone slipped to the third spot, after divesting Stonyfield following the acquisition of WhiteWave, reducing its stake in Yakult, and selling its holdings in the Al Safi Danone joint venture in Saudi Arabia.

The world’s largest food and beverage company, Switzerland’s Nestlé, reigns supreme on the list, but the gap between number 1 and number 2 has narrowed.  Photo: Nestlé
The world’s largest food and beverage company, Switzerland’s Nestlé, reigns supreme on the list, but the gap between number 1 and number 2 has narrowed. Photo: Nestlé

Mergers and acquisitions on the rise

Rabobank addresses in the report that merger-and-acquisition (M&A) activity in the dairy sector grew in 2017, fuelled – as in other sectors – by the availability of cheap capital. There were 127 deals in 2017, compared to 81 transactions in the year before. However, unlike other food and agribusiness sectors, the megadeals which did occur (Danone/WhiteWave and Saputo/Murray Goulburn) had limited impact on rankings within the top 20 list.

China considers global growth opportunities

According to the Rabobank analysts, Chinese companies need to address the integration of non-Chinese management as they consider growth opportunities around the globe. Increased collaboration between Chinese and non-Chinese companies in China has the potential to create a pipeline of global management talent. At the same time, there is an opportunity for non-China-based companies to increase their presence and participation in the Chinese market and dairy sector.

Source: Rabobank

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