Global dairy companies shrunk during 2015 forcing attention towards new markets

2015 proved to be a difficult year for most dairy companies
2015 proved to be a difficult year for most dairy companies

Global dairy companies shrunk during 2015, forcing attention towards new markets for further development, in particular Africa.

The Rabobank Global Dairy Top 20 2016, the latest annual Rabobank survey of the world’s largest dairy companies, highlights the giants of one of the world’s most valuable food sectors.

2015 proved to be a difficult year for most, with the strong US dollar and currency volatility, together with low commodity prices, reducing turnovers for most companies.

Source: Rabobank
Source: Rabobank

Mergers and acquisitions continued apace, as companies continued to seek additional value from domestic markets and new opportunities elsewhere.

According to Rabobank’s Global Dairy Strategist Kevin Bellamy: "The big story in this year’s top 20 list of dairy companies—based on turnover—is the shrinkage of the overall size of the pie.

"Low dairy commodity prices and currency movements have had a dramatic downward effect on company sales values."

In US dollar terms, the top 20 posted combined dairy sales of USD 194bn in 2015, down 13% YOY.

It is indicative of how much the euro has weakened against the US dollar in 2015 that the same collective turnover of the top 20 improved 4% YOY in euro terms.

As growth in China slowed, the world’s largest dairy companies started to look for new horizons to develop.

Africa is now definitely on the dairy map. In total, there were 14 deals in Africa, with four more year-to-date in 2016.

This compares with only three deals recorded in Africa in the whole of 2014.