Lactalis still world's largest dairy company with $US28.6 billion turnover

The French-based dairy behemoth grew turnover by 7.3 per cent to $US1.9 billion in 2022 to comfortably claim the top spot, Rabobank's annual Global Dairy Top 20 report has revealed.

Lactalis has a huge footprint in Australia, with a presence in all states and a big share of the liquid milk market.

It acquired Parmalat in 2011, but only changed the name to Lactalis in Australia in 2019.

The Italian Parmalat made a move in Australia in the 1990s, firstly claiming a stake in a small NSW-Victorian border milk processor before acquiring Queensland-based Pauls and then National Foods sites in NSW and SA.

The 2014 acquisition of Western Australian company Harvey Fresh and 2015 acquisition of Fonterra's yoghurt's and desserts business with plants in Victoria and Tasmania gave Lactalis an Australia-wide footprint.

The company has recently attracted the ire of regulators in Australia and in July was fined $950,000 for breaching the Australian Dairy Code of Conduct in 2020-21.

Lactalis's aggressive mergers and acquisition strategy has been one of the keys to its growth.

Although the size and pace of these eased in 2022, the company continued to acquire additional dairy assets, including the Australian-based Jalna Dairy Foods, the Rabobank report noted.

It also acquired German Bayerrisce Milchindustrie's (MBI) fresh dairy division and French specialty cheesemaker Verdannet.

The Rabobank report revealed the golden period is continuing for the top 20 dairy companies - with many reporting record-high revenues in local currencies.

In US dollar terms, combined turnover of the global dairy top 20 jumped 7.4pc on top of 9.3pc growth the previous year.

Dairy commodity prices were inflated due to the war in Ukraine and lower than expected milk production growth.

But Rabobank warned it was not all clear sailing for dairy companies.

Higher revenues were quickly absorbed by an exploding cost base and record milk prices, it said.

"Many dairy companies paid record-high average farmgate milk prices to offset large farm input costs," it said.

"At the factory gate, rising energy costs and the availability of natural gas - especially in Europe - were the largest concerns, as dairy processing is an energy-intensive process.

"Cost for the other components, such as logistics, packaging materials and labour, also escalated."

Only five companies held the same position as last year with a reshuffle along the list.

Fonterra was one of the companies sliding down the list, dropping from sixth to ninth position.

Its annual turnover fell from $US14.8 billion to $US14.2 billion.

The decline reflects Fonterra's decision two years ago to dispose of non-core assets and focus on its New Zealand business, although it decided a year later to hang onto its Australian business.

The giant New Zealand co-operative sold its Chilean subsidiary Soprole in early 2023; the sale of its Brazilian joint venture with Nestle, DPA Brazil, to Lactalis is pending.

Saputo solidified its position at 10^th on the list, with double-digit revenue growth to $US13.7 billion, up from $US12 billion last year.

The sale of two of its Australian processing plants to Coles is still waiting on regulatory approval.

Chinese dairy company Mengniu, which is the majority shareholder in Burra Foods, slipped from seventh to eighth on the list with turnover of $US14.4 billion.

Mengniu's expansion plans in Australia were frustrated in 2020 when then treasurer Josh Frydenberg blocked its bid to buy Lion's milk, yoghurt and fruit juice business, in the wake of COVID-19 political tensions between the two countries.

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