Emmi divests stake in Italian cheese group Venchiaredo
The Swiss group first took a minority holding in Ramuscello-based Venchiaredo in 2010. At that time, it’s Italian unit also took over responsibility for the sale of the cooperative’s cheeses. In 2012, Emmi increased its stake from 10% to 24%.
In a statement, Emmi said that the purpose of the investment was to increase its exposure to Italy’s fresh cheese market and generate synergies with Emmi-owned yogurt maker Trentinalatte. Emmi added that the decision to exit Venchiaredo was prompted by its sale of Trentinalatte in 2014 to private equity firm the Livia Group.
Venchiaredo produces mozzarella, stracchino, mascarpone, ricotta and butter. It generated sales of approximately €20m last year, with domestic revenue accounting for around two-thirds of group sales.
Bologna-based Italian dairy group Granarolo will take over sales of Venchiaredo products.
Emmi did not provide financial details of the transaction but the company did note it would have “no significant impact” on EBIT.
Focusing on growth markets and categories
Announcing the move, Emmi said it is focusing its activities on “markets and segments with considerable growth potential”.
A spokesperson for the group suggested that economic conditions in Italy have placed pressure on the growth outlook for the dairy category in the country. "The Italian market is very competitive. Due to the tough economy, private labels and discount recipes became more and more important and this is not the field where Emmi wants to position the company. This was also the reason why we divested Trentinalatte," the spokesperson said.
According to Euromonitor International, cheese sales in Italy are under pressure as consumers seek out lower calorie options. The research firm predicts retail cheese sales in the country will fall by a 2% CAGR at constant 2016 prices and by a 1% CAGR in retail volume terms.
“The product is expected to face decreasing consumption driven by consumers’ interest in products bearing a smaller number of calories, while a share of sales is expected to be taken by other, lactose-free alternatives,” the researchers note.
In contrast, Euromonitor predicts that cheese sales in foodservice channels will return to growth as Italian economic conditions improve.
Emmi will maintain a presence in the Italian cheese sector through its 25% stake in cheese trader Ambrosi, which produces premium specialty Italian cheeses in Italy and abroad. Emmi is also active in the Italian market via its dessert business and sales of cheese exports from Switzerland.
The company stressed that it remains committed to its Italian dessert operations. "We are still committed to the Italian dessert business. This is mainly an export business and therefore much less depending on the Italian economy," the company's representative explained.
This is one of a number of deals made by the acquisitive Swiss group in recent years, including investments in Brazil’s Laticínios Porto Alegre Indústria e Comércio and Spanish goat’s milk processor Lácteos Caprinos.
Emmi's portfolio strategy has focused on growing its business in niche areas and divesting businesses with less growth potential. "We indeed want to make our investments where we can have sustainable growth and earnings and are prepared to divest businesses where this is not possible. Areas where we want to invest are niches like goat cheese, organic etc. Markets where we want to invest are growth markets like the US or less developed markets outside Europe. An example is Brazil, where we bought the 40% participation in Laticinios Porto Alegre earlier this year," the spokesperson concluded.
