And the results show a change at the top, as Lactalis, driven by M&A deals, leapfrogged Nestle to take top spot.
Rabobank said Lactalis' attention to organic growth, as well as its dedicated global M&A strategy, has propelled the company from ninth place in 2000, with a turnover of 4.8bn, to the dominant position in 2021, with a turnover of $23bn, an increase of more than 370% since the start of the century. Since 2010, Lactalis has grown through approximately 60 deals, expanding its global footprint in the Middle East, Africa, and North and South America. Lactalis' pending acquisition of the Kraft Heinz natural cheese business and Groupe Bel's Royal Bel Leerdammer, Bel Italia, Bel Deutschland, and Bel Shostka Ukraine, which have a combined annual turnover of about $2.5bn, will extend the company's lead in next year's ranking, Rabobank predicts.
While Nestlé sold its US-based ice cream business to Froneri in 2019, Nestlé's estimated 2020 dairy-related turnover of $20.8bn is still represents a 60% increase compared to the start of the century.
The US's largest dairy cooperative, Dairy Farmers of America (DFA), retains the third position. The co-op edged Danone out of third place in 2019 after acquiring Dean Foods. DFA and Danone both reported lower dairy-related sales in 2020. DFA disposed of some assets and milk volumes due to the Dean Foods' acquisition, while Danone faced some headwinds in the infant formula market.
Rabobank noted that, like Nestlé, Danone's portfolio continues to evolve, with a greater focus on acquisitions in the dairy alternatives space.
Global Dairy Top 20, 2021
† - estimated
Figures are US$bn dairy turnover for 2020, predominantly dairy sales and based on 2020 financials and M&A between January 1, 2021 and June 30, 2021. Pending deals are not included.
The results showed the combined turnover of the Global Dairy Top 20 fell by 0.1% in US dollar terms, following the prior year's 1.8% gain. Merger and acquisition activity slowed in 2020, with approximately 80 announced deals compared to the prior year’s 105. However, activity has picked up in 2021, with more than 50 deals announced by midyear.
The biggest upward movement in the top 20 is Kraft Heinz jumping three places to 15th overall, however, Rabobank is predicting it will drop out of the top 20 next year.
Rabobank noted in the report that 2020 was an unprecedented year with dairy companies facing significant challenges. However, overall, Rabobank said the dairy sector fared better than many feared at the onset of the worldwide pandemic.
What to expect next year? Well, Rabobank is predicting investment activity to remain robust in the on-trend channels and categories, including specialty cheese, innovative dairy ingredients like human milk oligosaccharides, dairy alternatives ranging from plants and fermentation to cell-based, and lifestyle nutrition. Rabobank is also forecasting acquisitions in adjacent sectors, such as logistics and inventory management, are likely.
Looking even further ahead, Rabobank said by 2030, it anticipates consumers will have the option to buy competitively-priced plant-based and cell-cultured dairy alternatives. Rabobank believes non-GMO-sensitive consumers will likely choose plant-based alternatives, but dairy's nutrient density will keep it a dietary staple. However, it warns it is crucial the dairy sector is part of a global carbon-reduction solution resonating with climate-sensitive consumers, and prevents food manufacturers and foodservice operations from taking dairy out of their products and off their menus.
The full report can be downloaded here.