RaboResearch’s annual Global Dairy Top 20 report reveals a year of modest gains and strategic shifts within the dairy sector. The report, which analyses the financial performance of the world’s leading dairy companies, indicates a slight 0.3 percent increase in combined turnover in US dollar terms, a stark contrast to the previous year’s 8.1 percent growth. Lactalis remains No. 1, followed by Nestlé and Dairy Farmers of America. Fewer than half the companies listed maintained the same position as last year. FX developments continue to impact the overall rankings, and limited M&A activity was again a key theme this year.
Lower commodity prices dampen revenue growth
The report attributes the deceleration in revenue growth to lower milk prices in 2023 compared to the robust values seen in 2022. This trend particularly affected European cooperatives, and seven companies worldwide reported lower revenues in their local currencies. Despite this, many companies have managed to report stronger profits and margins than in the previous year.
Lactalis keeps No. 1 spot, achieving record revenue
France’s Lactalis kept its top spot in the ranking for the third year. It became the first company ever to exceed USD 30bn in annual dairy-related revenue, an accomplishment that follows several years of significant revenue expansion through organic growth and acquisitions. Nestlé came in second on the list, swapping spots with Dairy Farmers of America, largely due to weaker milk prices.
Fonterra up to sixth
The report says Fonterra’s revenue jumped, lifting the cooperative’s ranking three place compared to last year. While acknowledging performance was strong, the report notes that Fonterra’s financial year-end was July 31, 2023, meaning higher revenues likely reflect elevated commodity prices throughout the second half of 2022 which may have skewed the comparison to key global competitors with different financial year-end dates.
The report says Fonterra is unlikely to maintain its No. 6 position in coming years given the cooperative’s strategic shift to focus on its core business and the potential for this to reduce future revenues.
Download the full report here