Merger and acquisition activity by top 20 companies remained relatively stable in 2021 but dropped in the first half of 2022.
Supported by the recovery in food service channels after the initial COVID-19 pandemic and continued strong retail channel sales, dairy demand firmed globally, Rabobank’s Richard Scheper said.
“Combined with lower-than-anticipated milk production growth in the main exporting regions and exceptionally strong Chinese import demand, dairy product prices rallied to elevated levels in 2021.”
Mr Scheper said this year’s ranking was characterised by “the movers and the shakers”.
“Both turnover growth and strategic activities were more significant than in recent years, causing movement in the ranking.
“Strategic repositioning and marketing activities, for example, resulted in the entry of Froneri and the departure of Kraft Heinz in the ranking.”
The second half of the leader board remained crowded with less financial separation between the companies, he said.
The four global cooperative giants are bunched in the sub-top of this year’s ranking. Each is facing some degree of limitation for organic growth in their domestic market.
In 2021, DFA continued its integration of the Dean Foods assets, while both Fonterra and FrieslandCampina disposed of non-core assets.
If you can’t beat them
Rabobank said with numerous product launches, dairy alternatives — including beverages, yoghurts, frozen desserts, cheese and hybrid products — have become more common in the product portfolio of top 20 companies, making it more difficult to extract pure dairy revenues.
As a result, the designation of ‘dairy’ is also becoming much more blurred.
Emissions targets
Gradually, more dairy companies are aligning their climate ambitions with the Science Based Targets initiative.
To date, eight of the top 20 companies have made a public commitment to (some of) the SBTi targets or have targets that are considered aligned with SBTi.
“Looking forward to next year, we expect another strong year for combined global dairy top 20 turnover as the underlying dairy commodity prices hit record or near-record levels around the globe on the back of the war in Ukraine and escalating inflation,” Mr Scheper said.
“However, weaker global dairy demand in the second half of 2022 is anticipated due the combination of COVID-related lockdowns, inflation impacting consumers’ purchasing power, and other economic headwinds.”
