Rabobank: 2013 rankings of ‘Top 20’ global dairy companies

Consolidation accelerates; Chinese players rise while U.S. companies slip

Rabobank has published a new report ranking the 20 largest companies in the global dairy industry, and highlighting the trends affecting these giants in one of the world’s most dynamic food sectors. 

In the report, published by Rabobank’s Food & Agribusiness Research and Advisory team, the bank said that while the top five dairy players continue to drive consolidation and maintain a firm hold on their positions, elsewhere in the sector there is much movement. Chinese players Yili and Mengniu continue their ongoing rise, while U.S. giants such as Kraft Foods slipped down the rankings this year.

 

Global dairy Top 20, 2013

Rank 2013 Rank 2012 Company Country

Dairy turnover 2012

($ U.S. billion)

1 1

Nestle

Switzerland

30.1
2 2

Danone

France

19.4
3 3

Lactalis

France

18.0
4 4

Fonterra

New Zealand

16.0
5 5

FrieslandCampina

Netherlands

13.5
6 6

Dairy Farmers of America

U.S.

12.1
7 8

Arla Foods

Denmark/Sweden

10.8
8 7

Dean Foods

U.S.

8.8
9 12

Saputo

Canada

8.4
10 10

Meiji

Japan

7.7
11 11

Unilever*

Netherlands/UK

7.5
12 15

Yili

China

6.5
13 --

Morinaga

Japan

5.8
14 14

Sodiaal*

France

5.8
15 16

Mengniu

China

5.7
16 9

Kraft Foods

U.S.

5.7
17 13

DMK

Germany

5.7
18 17

Bongrain

France

5.3
19 19

Schreiber Foods*

U.S.

4.5
20 18

Muller

Germany

4.2

* Estimate

Turnover data are for dairy sales only, based on 2012 financials and M&A transactions completed between Jan. 1 and June 15, 2013. Pending mergers and acquisitions that are not included in the dairy sales are the merger of 3A and Sodiaal, and Yashii’s acquisition by Mengniu.

Source: Rabobank, 2013

 

“The top five companies remain unchanged in their position on the list, yet there are now two Chinese companies in the rank of the largest 15 companies, whereas there were none in the top 20 until 2008,” commented Rabobank analyst Tim Hunt. “In contrast, the lack of a U.S.-based global consolidator means that the rankings of U.S. companies has declined.”

In Rabobank’s latest ranking, Nestlé extended its lead at the top of the table, with organic growth and the purchase of Pfizer’s infant nutrition business contributing to 23% revenue growth in dairy sales. Despite Nestlé’s performance, almost all of the top 20 firms felt the stiff headwinds of a slow global economy, EU recession, and maturing Western dairy markets in 2012.  At least six companies saw their dairy revenues actually decline in 2013 (in local currency terms). Rabobank said slowing organic growth potential is placing more pressure on companies to consolidate local industries and seek growth via acquisition, contributing to the flurry of recent activity among the top 20. Companies are also actively positioning themselves to access stronger growth markets abroad. 

Rabobank’s report said the Chinese government’s desire for domestic consolidation and vertical integration, together with local market growth, will almost certainly underpin further growth of Chinese giants Yili and Mengniu.

Looking at the U.S., a combination of confinement to the domestic market and lack of sizeable acquisitions has seen the rankings of U.S. companies decline in recent years. Kraft slipped seven places following the split of its U.S. grocery business from Mondelez, while Dairy Farmers of America saw sales decline in 2012 on an organic basis. Dean Foods fell one place on the back of the sale of WhiteWave and Morningstar and the contraction of the U.S. fluid market.

“With the rapid growth of the Chinese giants, it is quite possible that the U.S. dairy giants will be pushed further down the list in coming years, with the global landscape largely being shaped by others at present,” explained Hunt. “Size should not be a goal in itself, and U.S. companies can participate in growth offshore by developing their export businesses. However, with much of the growth opportunities in dairy likely to come outside of the U.S. in coming years, U.S. companies will need to think about whether being an unaligned exporter with no offshore footing will be enough to secure a fair share of the growth and value available in the future.” 

Rabobank’s Food & Agribusiness Research and Advisory team  is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. Visit www.rabobank.com/f&a