For the second consecutive year, there are no new entrants to the Rabobank’s Dairy Top 20 list, but there’s been a slight shuffle in rankings.
The world’s largest food and beverage company, Switzerland’s Nestlé, reigns supreme on the list, but the gap between number one and number two has narrowed.
French Lactalis swapped places with Danone, moving into second place.
Danone slipped to the third spot, after divesting Stonyfield following the acquisition of WhiteWave, reducing its stake in Yakult, and selling its holdings in the Al Safi Danone joint venture in Saudi Arabia.
Dairy price recovery in 2017 has positively affected the combined turnover of the top 20 global dairy companies, which was up 7.2 per cent on the year in USD, RaboResearch has shown.
Dairy senior analyst Peter Paul Coppes said the USD five billion threshold was difficult to achieve due to a scarcity of large acquisitions or mergers.
“However, while the names have remained the same, the order shifted in 2017.”
Merger-and-acquisition (M&A) activity in the dairy sector grew in 2017, fuelled – as in other sectors – by the availability of cheap capital.
Cooperatives are still dominating, but they are also challenged. Deals between Danone and WhiteWave, and Saputo and Murray Goulburn, had limited impact on rankings within the Global Dairy Top 20.
While M&A occurs in the dairy sector, dairy acquisitions tend to be limited in size and financial impact.
There is potential for growth within increased collaborations between Chinese and non-Chinese companies. If this happens, China has the potential to create a pipeline of global management talent.
Chinese companies need to address the integration of non-Chinese management as they consider global growth opportunities.
Rabobank sees an increased amount of disruption-based M&A deals, either defensive or opportunistic.
By nature, these deals are often small and involve start-ups, but they are growing in volume.