Despite an unprecedented year of COVID-19-related challenges, the global dairy sector’s resilience helped it fare better than many feared, according to Mary Ledman, dairy global strategist with Rabobank.
Rabobank’s annual listing of the Global Dairy Top 20 companies was released in late August (Table 1). Based on 2020 financial data in U.S. dollars, the combined sales of the world's 20 largest dairy companies were nearly unchanged from the year before, down just 0.1%.
Some of the challenges facing dairy companies during the year included retail and food service market disruptions and changing consumer purchasing behavior, volatile raw material costs and government interventions. Despite widespread logistics problems, however, global dairy trade was elevated.
Like 2020, European companies maintained their hold on half of the spots in the top 20, with three from the U.S. and two each from China and Canada. Companies in New Zealand, Japan and India round out the list.
While all those companies were also in the top 20 list a year ago, there were some minor position changes. Most noteworthy, the 2021 ranking has a new global dairy leader, Lactalis, based in France. The privately held company has been second or third on the list during the past five years but unseated long-time leader, Nestlé, based in Switzerland.
The move to the top has resulted from a long-term strategy of internal growth and global expansion by Lactalis, Ledman said. The company has completed more than 60 mergers of acquisitions since 2010, expanding its global footprint in the Middle East, Africa, North America and South America.
Formerly in the top spot, Nestlé sold its U.S. ice cream business to Froneri in 2019.
U.S.-based Dairy Farmers of America, which moved into the third position in 2019 after acquiring substantial assets from Dean Foods, held that spot on the list over Danone. Both companies saw declines in 2020 sales, Ledman said.
The 2022 Top 20 list of the largest global dairy companies is already taking shape. Mergers and acquisitions slowed in 2020 but was picking up in 2021. There were 105 announced deals in 2019, slowing to 80 in 2020. More than 50 deals had been announced through the first six months of 2021.
Lactalis is likely to strengthen its No. 1 ranking next year with pending acquisitions of the Kraft Heinz natural cheese business in the U.S. and Groupe Bel subsidiaries in the Netherlands, Italy, Germany and the Ukraine.
With its natural cheese business sale to Lactalis, Kraft Heinz, currently 15th, will fall out of the ranking next year. Seventeenth-ranked Sodiaal will regain control of Yoplait’s activities outside North America from General Mills.
Looking ahead, the pandemic has heightened consumers’ awareness of environmental issues, affecting their purchasing decisions, Ledman said. Many dairy companies, including those in Rabobank’s top 20, are making short- and long-term sustainability and carbon-neutrality commitments.
Rabobank anticipates “robust” investment activity in such things as specialty cheeses and innovative dairy ingredients. In addition, with the headwinds created by the COVID-19 pandemic, investments in logistics and inventory management are likely.
Dairy markets are expected to remain in balance as drought and rising on-farm production costs limit overall milk production growth among major exporting regions to less than 1.2%, Ledman said.
One other factor affecting future sales is the growth of plant-based alternatives and the advent of dairy-plant product blends.
