Rabobank Global Dairy Top 20 report: Fonterra remains at number 6

Fonterra's Darfield operation is among a national network helping it to retain its No 6 position among the world's largest dairy companies. Photo / Tim Cronshaw

Fonterra remains at No 6 among the dairy company powerhouses of the world with a French company tightening its No 1 spot.

The privately held Lactalis was found in Rabobank's latest Global Dairy Top 20 report to have strengthened its position.

Lactalis' turnover rose to $US26.7 billion ($NZ43 billion) last year - an increase of $US4.7 billion or 16.2 per cent on the previous year and it now sits well clear of Switzerland's Nestle, generating $US21.3 billion.

Fonterra was sixth on the list for the third year in a row with 2021 sales of $US14.8 billion, up by $US1.2 billion.

Rabobank senior agri analyst Emma Higgins said Lactalis' double-digit percentage sales growth was driven by it buying the KraftHeinz's US natural cheese business and Groupe Bel's Royal Bel Leerdammer, Bel Italia, Bel Deutschland and Bel Shostka Ukraine.

This added a combined estimated annual turnover of about $US2.1 billion, she said.

"This acquisition spree has continued into 2022 with the recent purchases of Australian-based Jalna Dairy Foods and German-based Bayerische Milchindustrie's (BMI) fresh dairy division."

Rising to third was France's Danone with a turnover of $US20.9 billion, swapping places with US-based Dairy Farmers of America on $US19.3 billion.

China's Yili was fifth with $US18.2 billion, up from $US13.8 billion.

Higgins said last year saw Fonterra complete the sale of its two wholly-owned China farming hubs.

"The company's disposal of DPA Brazil and Soprole, along with potential changes in the Australian-based business, are still pending," she said.

"Despite the sales of its Chinese hubs, greater China remains an important market for Fonterra - particularly for food service sales - as do other countries in the broader Asia-Pacific region."

Fonterra's annual results for this financial year will be announced next month.

The recovery in food service channels last year after the initial Covid pandemic and continued strong retail sales with firm global dairy demand assisted the top dairy companies.

Higgins said dairy product prices rallying to elevated levels from lower-than-anticipated milk production growth in the main exporting regions and exceptionally strong Chinese import demand also acted in its favour.

Another trend is that dairy companies are moving from just acknowledging their climate and sustainability ambitions for 2050, towards setting targets.