Groupe Lactalis lift-off looms for Swedish dairy co-op Skånemejerier

By Ben Bouckley

- Last updated on GMT

Related tags Milk Europe

A snapshot of Skånemejerier's product range
A snapshot of Skånemejerier's product range
Groupe Lactalis’ bid to take over Sweden’s second largest dairy player fits with the French firm’s strategy of reducing its reliance on cheese, and would give it further brands with which to pursue milk product growth in emerging markets, according to Euromonitor International.

The administrative council of Swedish dairy co-operative Skånemejerier approved a rule change on Monday that clears the firm’s potential sale to private French dairy conglomerate Groupe Lactalis.

Skånemejerier began talks with Groupe Lactalis last year, but the status of the association was changed last year to pursue talks with the French company, and yesterday’s vote saw 35 out of 42 council members vote in favour of new governing statutes allowing this move.

The southern Swedish firm said in a statement that negotiations on the sale are almost complete, and although details remained to be ironed-out, Lactalis could assume control from March 1.

A Groupe Lactalis spokesman told this morning: “I can confirm that after Monday’s vote, we are continuing discussions with Skånemejerier.”

Skånemejerier has faced tough competition within Sweden over the last couple of years, leading it to welcome the French company’s approach.

Euromonitor International senior company analyst, Ildiko Szalai told “The fact that Lactalis went for the second-largest dairy player in Sweden certainly fits with its acquisition strategy over the past decade, of key and national players within Europe.”

Pushing beyond cheese

Between 2006 to 2009 Lactalis acquired key or leading players within dairy in most eastern European countries – from Croatia to Romania to the Czech Republic, she added.

“Comparing this move to the purchase of, say, Parmalat, then it’s totally different in terms of scale, but they’re trying to achieve the same thing. Lactalis is very highly reliant on cheese and on western Europe.”​ Szalai said.

She explained that Skånemejerier only generated around 30% of its sales in cheese, with the other 70% coming from drinking milk, yogurts and other dairy products.

“These type of acquisitions try to reduce that reliance, both in terms of geography (market coverage) and category coverage. Cheese is growing and is high-margin in western Europe,”​ she added.

“But if you look at the Asia Pacific or Latin America, it’s drinking milk products that are driving overall dairy market growth, and this is what Lactalis has been purchasing,”​ Szalai said.

“The acquisition provides a growth platform for Lactalis in Sweden, but that said the market there is quite moderately sized (worth US $4bn in 2011), which is about 3% of the Western European dairy market, with very little growth predicted over a largely flat 2011-2016 period.”

Arla will continue to dominate

Lactalis was now only the seventh-largest player in the Swedish market with a 1.6% market value share in 2010, Szalai said. Buying Skånemejerier would make it number two with a 10% share, but this would not threaten Arla’s market leadership given its 48% share (2010), she added.

Skånemejerier has not released any details of the agreement under discussion between the two companies.

But asked whether Lactalis had given any guarantees regarding sites owned by the Swedish dairy and jobs, a spokesman said that the company’s council didn’t want to sell up to anyone who wanted to “lay down”​ the business.

Farmers who supplied Skånemejerier with milk wanted to have security in the coming years in terms of producing, delivering and getting paid well for the milk from their farms, he added.

He said: “It’s certainly been said about Groupe Lactalis that they’re very concerned about the local brands in the companies that they buy. So we hope for a strong owner who can develop our brands, and can keep the dairy production in Skåne, and that the farmers can continue to produce milk in future.”

Skånemejerier is owned by approximately 570 dairy farmers in southern Sweden, and its brands include Skånemejerier, Bravo, Allerum, Småland, Blekinge Milk.

Related topics Business Dairy-based ingredients

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