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Business

Fonterra drops in global dairy company Top 20 rankings

1 Sep, 2020 08:47 PM3 minutes to read
Fonterra drops two places in world dairy company rankings by revenue. Photo / Michael Craig

Fonterra drops two places in world dairy company rankings by revenue. Photo / Michael Craig

By
Andrea Fox

Herald business writer

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Fonterra has slipped from fourth to sixth place in the world's top 20 dairy company rankings.

Rabobank's annual listing of the top 20 dairy companies by revenue highlights strategic movements in one of the world's most valuable food sectors.

In fourth place now is Danone, having been pushed down from spot number three by Dairy Farmers of America, which last year was in sixth position.

Nestle of Switzerland retains its longstanding No 1. spot with revenue of US$22.1 billion.

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Second is Lactalis of France with US$21b, and third Dairy Farmers of America on US$20.1b.

Danone of France is next on US$18.2b, and China's Yili jumped three places to fifth on US$13.4b. Fonterra is close behind at sixth on US$13.2b.

Read More

  • Why Fonterra is feeding seaweed to cows - NZ Herald
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  • Fonterra upgrades 2020/21 milk price - NZ Herald

Friesland Campina of the Netherlands is down to seventh at US$12.6b from fifth position last year.

Chinese company Mengniu lifted from tenth to eighth position and Denmark's Arla Foods dropped from seventh to ninth place.

An Indian dairy company, Gujarat Cooperative Milk Marketing Federation, appears in the top 20 for the first time at 16th position with US$5.5b.

Rabobank said consolidation of key assets by Fonterra and Friesland Campina had resulted in lower year-on-year sales and their lower places in the top 20.

Fonterra's cooperative farmer-owners were facing increased environmental constraints which were limiting production growth, the bank said. As a result, Fonterra, along with Friesland Campina, were likely to focus on value strategies and rationalisation of plant capacity.

Dairy Farmers of America, the biggest cooperative in the US, had leapfrogged from sixth to third position by acquiring previous 11th placeholder Dean Foods early this year, boosting its year-on-year sales by 47.5 per cent.

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Increasingly fierce competition within China's domestic market was forcing that country's companies to look overseas for growth but this was becoming more challenging, said Rabobank. Rising tensions between China and Australia were also restricting acquisition activity.

Rabobank said there were 115 mergers and acquisitions in the global dairy arena last year, slightly ahead of 112 in 2018. Most of the deals were in Europe, where there were 64 activities, followed by North America at 39 and Asia 25.

As at mid-this year, there had been 52 deals. Rabobank said activity had been constrained by Covid 19 and foreshadowed more activity in 2021.

Next year, the bank expected lower milk production growth to continue in major exporting countries, due in part to rising production costs through compliance with growing environmental regulations.

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