Mexican dairy company, Grupo Lala, has agreed to acquire the U.S. assets of Laguna Dairy’s branded business for US$246 million.
The all-cash deal is part of Grupo Lala’s strategic plan to expand its portfolio’s value-added branded categories in high growth markets in the Americas, and will provide Grupo Lala a platform from which to grow its sales to Hispanic consumers in the U.S.
Laguna’s branded business, which is the leading brand in the adult drinkable yogurt category, has seen double digit growth over the past two years and is expected to see sales in 2016 reaching US$200 million. Other brands in its portfolio include Promised Land specialty milks, and Skim Plus premium milks.
“Through this transaction we are obtaining modern production facilities, growing businesses in value added categories, and a local platform for future growth in the world’s largest dairy market,” noted Scot Rank, Grupo Lala CEO, in a press statement.
Grupo Lala is not the only foreign dairy company to mark the U.S. as a potential growth market. Denmark-based Arla’s corporate strategy, ‘Good Growth 2020’ has identified the U.S. as one of its six strategic growth regions, and together with Missouri-based Dairy Farmers of America (DFA) has entered into a joint venture agreement for the production of high quality cheddar cheese and the construction of a dairy plant in New York State. The $58 million venture will be 70% owned by DFA, which will also manage operations, and 20% owned by Arla, with the remaining 10% owned by the eight farmers who will be supplying milk for processing.
This deal pursued by Grupo Lala is a reflection of the huge market potential for Mexican dairy companies that lies directly north in the U.S. Despite healthy domestic milk production and a high consumption of cheese, per capita dairy consumption in Mexico is less than half of U.S. dairy consumption rates, according to the U.S. Dairy Export Council.
Average annual per capita dairy consumption in Mexico is approximately 126 liters or 286 pounds, or about 345ml per day. This rate is noticeably less than the 500ml per day recommended by the UN Food and Agriculture Organization (FAO), and significantly less than the U.S. consumption rate of 750ml per day.
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- GAI News staff