DAIRY SECTOR CONSOLIDATION - Dairy Farmers of … · DAIRY SECTOR CONSOLIDATION (MERGERS &...
Transcript of DAIRY SECTOR CONSOLIDATION - Dairy Farmers of … · DAIRY SECTOR CONSOLIDATION (MERGERS &...
DAIRY SECTOR CONSOLIDATION (MERGERS & ACQUISITION, NEW INVESTMENTS AND STRATEGIES)
1
Béranger GUYONNET (CNIEL) February 3, 2016
DFC Annual Dairy Policy Conference, Ottawa Canada
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Introduction :
Current dairy situation
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Cniel / Clal, Commission, Dairy Australia, DCANZ, Siap, ODEPA, Turkstat, Ukrstat, USDA, ZMB
USA12 m 2015 : + 1,2%
Australia11 m 2015 : + 3,0%
New Zealand12 m 2015 : - 1,4%
EU 2811 m 2015 : + 1,7%
Japan11 m 2015 : + 0,6%
Mexico12 m 2015 : + 2,4%
Russia11m 2015 : stable
Chile6 m 2015 : - 6,0%
Turkey11 m 2015 : + 3,4%
Ukraine11 m 2015 : - 5,0%
Brazil9 m 2015 : - 2,5%
Belarus11 m 2015 : + 5,3%
Uruguay11 m 2015 : + 2,1%
Argentina11 m 2015 : - 1,1%
Importing country
Exporting country
Production trends in 2015 in key global dairy areas
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Monthly evolution of milk production in the 5 main producing areas of the
World
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
01/2013 01/2014 01/2015
Mln litres
UE à 28* Nelle-Zélande Etats-Unis Australie Argentine* Total
Cniel / Commission, Dairy Australia, DCANZ, Siap, USDA, ZMB *Deliveries
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AlgeriaImport 6 months 2015
SMP : - 17%WMP : + 16%
5
Import trends at the beginning of 2015 in key markets
NB : évolution des exportations sur base volume
USAImport 11 months 2015
Cheese : + 23%Caseins : - 6%
JapanImport 9 months 2015
Cheese : + 8%
ChinaImport 11 months 2015
SMP : - 22%WMP : - 49%Whey : + 7%
RussiaImport 10 months 2015
Butter : - 30% Cheese : - 40%
BrazilImport 11 months 2015
WMP: + 101%Cheese : + 5%
Cniel / Ubifrance, douanes nationales
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FOB Price - Ocaania in 1 000 USD / tonne
Global prices in January 2016
Cniel / USDA
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016
Butter
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016
SMP
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016
WMP
1
2
3
4
5
6
2011 2012 2013 2014 2015 2016
Cheddar
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Current European milk deliveries
Evolutions * - monthly and cumulative 2015
Evolution EU 28
Cniel / Eurostat, ZMB, FAM (EML), PZ, DairyCo, CLAL * in %, vs. Same period of previous year
10
11
12
13
14
jan fev mar avr mai jun jul aout sep oct nov dec
Thousand tonnes
2013
2014
+1,7% first 11 months of 2015
2015
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25
30
35
40
45
jan fev mar avr mai jun jul aout sep oct nov dec
€ / 100 kg
Germany 2013
2014
2015
20
25
30
35
40
jan fev mar avr mai jun jul aout sep oct nov dec
€ / 100 kg
Poland2013
2014
2015
25
30
35
40
45
jan fev mar avr mai jun jul aout sep oct nov dec
€ / 100 kg
The Netherlands
2013
2014
2015
25
30
35
40
45
jan fev mar avr mai jun jul aout sep oct nov dec
€ / 100 kg
UK20132014
2015
NB : fat and protein contents may differ from one member state to another.
8
Farmgate milk prices
Cniel / ZMB
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In this context :
Dairy actors’ development strategies
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AmericaDFA (US) 17.9
Dean Foods (US) (D) 9.5
Saputo (CA) (E) 9.4
Land O’Lakes (US) 5.1
Schreiber (US) (F) 5.0
Agropur (CA) 4.2
Kraft Foods (US) 4.1
Lala (MX) 3.4
Great Lakes Cheese (US) 3.2
Leprino (US) 3.1
Co-operatives
Private companies
32 groups generated dairy sales exceeding 3 billion USD in 2014
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Asia
Yili (CN) 8.8
Mengniu (CN) 8.1
Meiji Dairies (JP) (E) 5.8
Morinaga (JP) (E) 5.4
Megmilk Snow Brand (JP) (E), (G) 4.3
GCMMF Amul (IN) (E) 3.4
Bright Dairy (CN) 3.3
OceaniaFonterra (NZ) (C) 18.7
Europe
Lactalis (FR) 21.9
Nestlé (CH) (A) (B) 18.3
FrieslandCampina (NL) 15.0
Danone (FR) (A) 14.8
Arla Foods (DK) 14.1
Sodiaal (FR) 7.2
DMK (DE) 7.0
Savencia (FR) 6.1
Müller (DE) (F) 4.9
Glanbia plc (IE) 4.7
Emmi (CH) 3.7
Bel (FR) 3.7
Tine (NO) 3.3
Ornua (IE) 3.1
(A) Infant formula excluded
(B) Dairy and ice cream activities redefined in 2013
(C) Year finishing in July
(D) All activities included
(E) Year finishing in March of the following year
(F) Estimate
(G) Fruit juices and infant formula included
NB : Kerry, Unilever, PepsiCo & Mondelez not ranked
CNIEL
AmericaKraft (US) 4.1
Mid-America Dairymen (US) 4.0
Co-operatives
Private companies
11 groups generated dairy sales exceeding 3 billion USD in 1996
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Asia
Snow Brand (JP) 6.8
Meiji Milk (JP) 3.0
OceaniaNZDB (NZ) 4.2
Europe
Nestlé (CH) 13.5
Danone (FR) 5.7
Besnier (FR) 4.7
Campina Melkunie (NL) 3.8
Sodiaal (FR) 3.3
MD Foods (DK) 3.2
CNIEL
The financial weight of the dairy leaders has massively increased
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Total turnover of the 20 biggest dairy players (billion USD)
1996 2003 2010 2014
77
2010
100
162208
+ 170%
This growth is mostly a rise in terms of volume, insofar as the increase
of dairy product prices has been noticeably weaker
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Price development of dairy products on the American market
1
2
3
4
5USD / Gallon
Whole fresh milk
96 14
+ 41%
2
3
4
5
6USD / lb
Natural cheddar
96 14
+ 71%
2
3
4
5USD / lb
American processed cheese
96
+ 35%
USD / lb
96 14
CNIEL / UW Madison
This growth is mostly a rise in terms of volume, insofar as the increase
of dairy product prices has been noticeably weaker
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CNIEL / ZMB
4
5
6
7
8€ / kg
Young gouda sold on deli counters
96 14
+ 33%
Price development of dairy products on the German market
0.4
0.5
0.6
0.7
0.8€ / litre
Whole fresh milk
96 14
+ 17%
0.6
0.8
1.0
1.2€ / 250g
Butter tub
96 14
+ 4%
Despite the important restructuring that has occurred over the last 20
years, the dairy industry remains fragmented
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Worldwide ‘organized’ market for dairy products in 2013(milk delivered to and processed by dairies)
~ 460 million tons in milk equivalent
~ 500 billion USD at factory level
The world market share of top players is about 4%
CNIEL
The current set of dairy leaders presents a wider geographical diversity
than before
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7 countries
developed countries only
14 countries
including Mexico, India & China
Origin of the biggest dairy players(turnover > 3 billion USD)
1996 2014
CNIEL
In Asia, dynamic domestic demand has stimulated the emergence of
national dairy leaders
DFC February 3, 2016 17
CNIEL
0
2
4
6
8
10
2004 2006 2008 2010 2012 2014
Mengniubillion USD
x 9 within 10 years
8.1
0.9
NB: total turnover
0
2
4
6
8
10
2004 2006 2008 2010 2012 2014
Yilibillion USD
x 8 within 10 years
1.1
8.8
In Asia, dynamic domestic demand has stimulated the emergence of
national dairy leaders
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CNIEL
0
1
2
3
4
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
billion USDFiscal year ending in March
0.4
0.7
3.4
moderate growth
x 5 within 10 years
Some western groups have also achieved strong growth during the last
few years. This is the case of Canada’s Agropur since 2002
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NB: total turnover
CNIEL
0
1
2
3
4
5
1997 1999 2001 2003 2005 2007 2009 2011 2013
billion USD
0.9 1.2
4.4moderate growth
x 3.6 within 12 years
Canada’s Saputo, which was a regional company until the mid-nineties,
increased its turnover thirtyfold since 1996
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CNIEL
0
2
4
6
8
10
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
billion USD
0.3
1.3
9.4x 4 within 3 years
x 7 within 14 years
Fiscal year ending in March
1.3
French Lactalis has also sped up its growth during the last decade
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CNIEL
0
5
10
15
20
25
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
billion USD
4.2
21.9
x 4 within 13 years
4.9
moderate growth
Expansion of Western companies relies on a growing
internationalization of their activities. Example of Saputo in the USA
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CNIEL
0
1
2
3
4
5
1998 2000 2002 2004 2006 2008 2010 2012 2014
Dairy turnover in the USAbillion USD
0.3
4.7
Fiscal year ending in March
International activities outside the USA have also been a new growth
engine for Saputo over the last few years
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CNIEL
0.0
0.5
1.0
1.5
2.0
2012 2013 2014 2015
Dairy turnover international(outside USA and Canada)
billion USD
0.9
1.4
Fiscal year ending in March
Lactalis generated 75% of its turnover outside of France in 2014, as
compared to only 32% in 1993
DFC February 3, 2016 24
CNIEL
0
5
10
15
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
billion USD
Rest of the World
France
Turnover geographical breakdown
However, internationalization is not a prerequisite feature to be
considered as a world dairy leader
DFC February 3, 2016 25
Milk processed abroad
(Billion litres)
2
4
6
8
10
12
14
2 4 6 8 10 12 14 16 18 20 22 24
Milk processed
or collected
at national level
(Billion litres)
50% / 50%
25% / 75%
10% / 90%
% of milk processed abroad and at national level by dairy leaders in 2013
All the other dairy leaders with dairy turnover > 3 Billion USD NB : Borden Dairy Company split from Lala in 2013 CNIEL
Some dairy leaders such as Lactalis have massively internationalized their
processing activity over the last few years
DFC February 3, 2016 26
Location of its acquisitions since 2005
2005: McLelland (GB), Cadermartori (IT), Al
Nour, ACFFI (EG), UFIC (EG), Bacha (PL)
2006: Galbani (IT), Célia (FR), Lactalis Nestlé
UF (FR, ES)
2007: Dukat (CR, RS), Klatovy, Kunin (CZ),
Fanni (UA), Mozzarella Fresca (US), Mama
Luise (ES)
2008: Obory (PL), Baër (CH), activity of Milupa
Nutricia in FR
2009: Lubborn (GB)
2010: Forlasa, milk activity of Puleva, Sanutri
(ES), Lemnos (AU), Efremov (RU), Rachel’s (GB)
2011: Parmalat (IT, CA, PT, RO, RU, ZA, AU, BW, CO, CU,
EC, MZ, PY, SZ, VE, ZM), Wächli, Fromageries de l’Etoile,
Cibem (FR), El Castillo Debic Food Service (ES)
2012: Skånemejerier (SE), Ljubljanske Miekerne (SI),
Fromagerie du Dauphiné (FR), Jindi (AU)
2013: Balkis (BR), Tirumala (IN)
2014: Harvey Fresh, Longwarry (AU), Fromagerie de Banon
(FR), 4 plants of LBR, dairy assets of BRF (BR)
2015: Latterie Friulane (IT), Lácteos Algil (MX, UY, AR), 80%
of AK Gida (TR), 49% of Walhorn (BE)
CNIEL
Likewise, investment strategy undertaken by Nestlé over the last few years
shows no geographical limits
DFC February 3, 2016 27
Investments announced or finalized by Nestlé in the dairy sector
between 2011 and 2014 (million USD)
.China
Dairy farming institute (400)
Dairy farm with 2 000 cows
BrazilUHT milk (80)
Whey (31)
ChileMilk powder (140)
PhilippinesMilk powder (95)
IndonesiaMilk powder (200)
UEAMilk powder (136)
SwitzerlandInfant formula (213)
New research center
GermanyInfant formula (152)
PortugalMilk powder (2)
AlgeriaMilk powder (n/a)
AngolaPowder packing (11)
ZimbabweImport of 2 000 heifers (13)
Sri LankaUHT milk (6)
MoroccoMilk intake (6)
ColombiaLiquid milk (n/a)
CNIEL n/a: not available
SpainConcentrated milk (8)
JamaicaDairy Beverage (10)
WorldPfizer’s infant formula
activities (11 850)
IndiaDeliveries (through Indocon Agro)
Facility Modernisation (65)
Dominican Rep.Concentrated milk (14)
MalaysiaDairy Beverage (49)
MexicoInfant formula (370)
Milk intake (55)
EgyptIce cream (28)
FranceMilk powder (16)
Even co-operatives are becoming transnational
DFC February 3, 2016 28
Geographical breakdown of Arla Foods’ shareholders
0
5,000
10,000
15,000
01 02 03 04 05 06 07 08 09 10 11 12 13 14
Denmark
Sweden
Germany(2 769)
shareholders
Sweden(3 336)
Denmark(3 144)
United K.(2 854)
Belgium(997)
Luxembourg(228)
Netherlands(55)
CNIEL
Western leaders are investing massively in Africa –A few examples in 2014
and 2015
DFC February 3, 2016 29
FrieslandCampina bought up Olam’s
dairy factory located in Abidjan (Ivory
Coast) for 19 million USD in September
2014.
In July 2014, Danone
purchased a 40% stake in
Kenyan dairy leader Brookside.
CNIEL
In November 2014 and in December 2015, Danone increased
its stake into Moroccan La Centrale Laitière from 67% to
90.9% then 95.9% for 370 million USD and 70 million USD.
French Fromageries Bel
bought 69.8% of Safilait, the
third biggest Moroccan dairy
group in May 2015.
In June 2015, FrieslandCampina
increased its stake into Nigerian Wamco
from 54.6% to 67.6% for 200 million USD.
PZ Cussons became the sole owner of Nigerian
Nutricima, by acquiring the 50% stake of its
partner Glanbia for 30 million USD in April 2015.
In 2015, Arla Foods
expands its distributing
network, setting up
partnerships in Egypt
with Juhayna, in Nigeria
with Tolaram and in
Senegal with Attieh
group.
Western leaders are investing massively in Latin America – A few examples in
2014 and 2015
DFC February 3, 2016 30
Nestlé is investing 370 million USD in a new
infant formula factory in Ocotlán, expected to
be operational in 2016.
In January 2015, Lactalis, through its
subsidiary Parmalat, acquired Mexican
Lácteos Algil for 105 million USD.
CNIEL
In 2014, Lactalis undertook two
colossal acquisitions in Brazil: first,
4 plants previously owned by LBR
for 105 million USD; second, all the
dairy assets of Brasil Foods for 770
million USD.
Arla Foods took an 8% stake in
Brazilian dairy leader Vigor in
September 2014.
In July 2015, Danone planned to
invest 55 million USD in a new
yoghurt factory in Itapetininga.
In July 2015, Arla Foods and SanCor
obtained a 56 million USD loan to
increase whey production in their
Argentinean joint-venture Afisa.
Western leaders are investing massively in Asia –A few examples in 2014 and
2015
DFC February 3, 2016 31
Lactalis purchased 80% of
Turkish dairy leader AK Gida for
780 million USD in May 2015. CNIEL
Danone invested 645 million USD to
increase its stake into Mengniu from
4% to 9.9% in February 2014, and
bought 25% of Yashili International for
580 million USD in October 2014.
FrieslandCampina purchased 50% of
Huishan Dairy’s infant formula factory
located in Xiushui as well as a stake in
Huishan Dairy’s capital for 145 million
USD in October 2014.
Fonterra purchased 18.8% of infant
formula manufacturer Beingmate for
570 million USD in 2015.
Yoplait, owned by General Mills (51%)
and Sodiaal (49%), set up a new
yoghurt factory in Eastern China in
spring 2015.
Conversely, Asian leaders are investing in Western countries –A few
examples in 2014 and 2015
DFC February 3, 2016 32
In April 2015, Chinese Biostime inaugurated a new 80 million
USD milk powder plant set up with French Isigny Sainte Mère.
By mid-2016, Chinese Synutra is expected to have opened
two new driers built in partnership with French Sodiaal.
CNIEL
Chinese Bright Dairy & Food bought
56% of Tnuva, Israel’s largest food and
dairy company, for 2.4 billion USD in
May 2014.
In November 2014,
Chinese Yili set up a
partnership with DFA
to develop a milk-
powder production
facility in Kansas.
Chinese Yili announced
the construction of a
new milk powder and
UHT factory in Waimate
for 325 million USD in
November 2014.
The United States is particularly attractive to foreign investors
DFC February 3, 2016 33
Investments announced or finalized between 2012 and 2014
in the United States by European companies
Total > 1 Billion USD
Acquisitions
Organic investments
Ireland
Whey 182 M USD
Aseptic solutions (60 M USD)
Sartori Foods (n/a)
Isopure (153 M USD)
France
Cheese 120 M USD
Germany
Yoghurt
50% of 250 M USD
with PepsiCo
Switzerland
Cheese 43 M USD
Yoghurt 12 M USD
25% of Siggi’s (n/a)
France
Cheese 40 M USD
Austria
Cheese 5 M USD
n/a : not available
CNIEL
Greece
Yoghurt 100 M USD
France
Yocrunch (n/a)
Germany
Yoghurt 62 M USD
Norway
Alpine cheese (n/a)
Ireland
Cheese 12 M USD
The United States is particularly attractive to foreign investors
DFC February 3, 2016 34
Colombia
Yoghurt 18 M USD
n/a : not available
CNIEL
Canada
Morning Star 1,450 M USD
Yili
China
Milk powder
30% of 100 M USD with DFA
India
Paneer, ghee 9 M USD
Investments announced or finalized between 2012 and 2014
in the United States by Asian and American companies
Total > 2.5 Billion USD
Acquisitions
Organic investments
Canada
Cheese, whey 255 M USD
Foremost’s blending activity (n/a)
Davisco ~980 M USD
Vietnam
70% of Driftwood Dairy
7 M USD
New Zealand’s dairy sector has also particularly evolved through important
foreign investments over the last few years
DFC February 3, 2016 35
Structure of the dairy processing sector / milk intake, shareholders
In 2001
340 Ml / y
~100 Ml / y
13 100 Ml / y
Today
750 Ml / y
150 Ml / y
17 900 Ml / y
930 Ml / y
Olam (SG)
535 Ml / y
Bright Dairy (CN)
Mitsui (JP)
FrieslandCampina (NL)
~200 Ml / y
Vinamik (VN)
(AU)
~ 300 Ml / y
Yili (CN)
Infant formula factory
(50 000 t / y)
Mengniu (CN)
Infant formula factory
(20 000 t / y)
Danone (FR)
CNIEL
Fonterra has been very active in terms of investments over the last few
years...
DFC February 3, 2016 36
Investments announced or finalized by Fonterra between 2012 and 2015
in New Zealand (million USD)
Total > 1.6 Billion USD
Clandeboye: mozzarella (60)
Te Rapa: cream cheese (24)
Whareroa: cheese storage (19)
dry product logistic (25)
Darfield: drier n°1 15 t / h (162)
drier n°2 30 t / h (243)
Pahiatua: milk powder (193)
Waitoa: UHT milk (98)
Eltham: cheese slicing (27)
CNIEL
Lichfield: milk powder (249)
Edendale: MPC, AMF (124)
Hautapu : lactoferrin (8)
Studholme : milk powder (419)
…but so have the other players
DFC February 3, 2016 37
Glenavy, infant formula (173)
Hamilton, goat milk powder (55)
Hokitika, drier (84)
Rolleston, UHT milk (33)
Pokeno, infant formula (179)
Waharoa, multi-products (16)
Dusandel, multi-products (145)
CNIEL
Balcutta, infant formula (n/a)
Christchurch, UHT milk (22)
Waimate, UHT milk
& milk-powder (325)
Yili
Investments announced or finalized by Fonterra’s competitors between
2012 and 2015 in New Zealand (million USD)
Total > 1 Billion USD
Otorohanga, poudre de lait (52)NZ Organic and Natural Dairy Company
DFC February 3, 2016 38
Thank you for your attention!