FrieslandCampina takes a step in Global Dairy Top 20

Over the past 18 months, 87 domestic deals have been closed, followed by 70 intercontinental deals and 39 regional deals. However, just like last year there are no mega deals closed, causing the transaction value to fall again this year. Most companies rationalized their activities and sales were therefore almost evenly distributed between the cooperatives and listed companies.

Low commodity prices, extreme weather, strong dollar and currency shifts have impacted top 20 sales. In percentage terms, an increase is still visible (+2,5%), but it is smaller than last year (+7,2%). However, turnover in euros fell by 2,0%, while last year there was still an increase of 5,1%. The top 10 has a turnover of $150 billion.

Hole is getting smaller
The top 3 of the Global Dairy Top 20 is unchanged, but is growing a little closer together. Nestlé (€20,6 billion) tops the list, although this company was helped by the relatively stable Swiss franc. Nestlé's growth is mainly due to the growth in baby food business. Lactalis (€17,6 billion) is starting to come close, but is still in second place in 2018.

The French dairy company closed 15 deals last year across the Middle East, Africa, South America and Asia. It already has a number of deals in the pipeline for the coming months, such as the acquisition of 2 Nestlé factories in Uzbekistan. Third place is for Danone (€15,2 billion), mainly because the acquisition of a 49% share in Yashili New Zealand is still uncertain.

Small step for FrieslandCampina
Fonterra (€12,1 billion) rises from fifth to fourth place, following the acquisition of the factory's remaining stake in Australia. The dairy company has also started a joint venture with a company from India. Fonterra is currently reviewing the portfolio and that also affects the position; for example, the dairy has sold the majority interest in Fast Forward and the interest in DFE Pharma (a j with FrieslandCampina) for sale.

FrieslandCampina (€11,6 billion) is also rising one spot this year, after it dropped one spot last year. This puts the Dutch dairy cooperative in fifth place. The increase is mainly caused by the many small investments in cheese (the Netherlands, Spain and the United States). In addition, the cooperative has a production agreement concluded with DMK, the largest dairy cooperative in Germany.

Fonterra and FrieslandCampina can also rise as Dairy Farmers of America drops from fourth to sixth place. The 7,5% decrease in turnover is entirely due to lower milk and raw material prices. However, the company still has a number of acquisitions in the pipeline for next year.

Shift in top 3 expected
Rabobank expects the top 3 to show a shift next year. In addition, slower economic growth in China and a looming recession in the United States will hamper growth. In doing so, the companies will consider their strategies in view of the trade tensions between the United States and China, but also with Mexico. Brexit also plays a role and increasing environmental regulations have a major impact on the implementation of the Global Dairy Top 20.