Global economic conditions and tight supplies have left the world’s biggest diary companies battling for market share. Because of this atmosphere, mergers and acquisitions have been a common course for gaining scale and profitability over the past 18 months according to Rabobank. In 2013 transactions in the dairy sector reached their highest point since 2007 at 124, compared to 111 in 2012. Even at this high level of activity, there were no billion dollar deals in the 12 months ending June 30, 2014 and markets are not expected to return to the growth rates seen prior to 2008, meaning that mergers and acquisitions and joint ventures will be the way toward growth. Among the list of the top 20 global dairy companies some outperformed the others in terms of growth. China-based Yili and Mengniu saw sales increase by 14% and 20% respectively, and Yili climbed to within the top ten global dairy companies for the first time. Saputo has climbed to eighth on the list after a string of acquisitions, and positioning for market share within the Chinese market is still ongoing. Global conditions have reached the point that the number of large, attractive targets is shrinking and the dairy giants will have to acquire multiple companies to maintain the same level of growth.
To receive relevant news stories with summaries provided by GAI Research & Insight, subscribe to Global AgDevelopments, our free weekly enhanced eNews service