Rabobank: General Mills’ yogurt divestment enhances Lactalis’ dominance

In September, General Mills announced it is selling its entire North American yogurt business to two dairy majors, Lactalis and Sodiaal. The deals, likely to be worth around $2.1bn in total, are set to close in the next calendar year and will put Lactalis in possession of US brands Mountain High and :ratio (plus Yoplait, Go-Gurt, Liberté and others under license) while over in Canada, dairy co-op Sodiaal will acquire Yoplait and Liberté. Lactalis and Sodiaal both feature in Rabobank’s Global Dairy Top 20, which ranks the 20 largest dairy companies based on turnover. In the latest rankings, Lactalis increased its lead over second-placed Nestlé (itself unseating Dairy Farmers of America, which shot up to the second spot last year) while Sodiaal increased its position from last year. A spokesperson for the bank told us: “Lactalis dominates the Global Dairy Top 20, with sales over $30bn and 25% above its nearest competitor. This acquisition only enhances its dominance. “Sodiaal, ranked 16th in Rabobank’s 2024 Global Dairy Top 20, is likely to move higher. The difference between companies’ revenue in the second half of the list is narrower and could be impacted by the transaction’s closing date.” “The acquisition expands Lactalis’ yogurt portfolio which already includes Stonyfield Organic, Siggi’s, Green Mountain Creamery and Brown Cow brands. “Given the company’s experience with the category globally, we can expect to see elevated product innovation, which will hopefully boost the category sales.” The bank declined to comment on the deal’s potential impact on Sodiaal’s broader market position other than indicating the co-op’s likely to move up the Global Dairy Top 20. Further shake-ups could influence next year’s standings, the spokesperson added. “Companies are re-examining priorities and in some cases, returning to core businesses while shedding parts of the business that are less profitable or misaligned with key strategic priorities. After several years without any large deals, it’s possible that any realized upcoming M&A activity could impact the positioning of companies in the Top 20 report.” In particular, other major deals could result from Unilever’s decision to spin off its ice cream division, and Fonterra’s announcement that it is selling its consumer business. “If an existing company/ies in the Global Dairy Top 20 purchases some of part of the Unilever’s ice cream business or Fonterra’s consumer business, it’s likely they will move higher in ranking,” the Rabobank spokesperson said. In FY23, Fonterra’s consumer business contributed $3.3b in revenue and $781m in gross profit to the co-op’s books. Meanwhile, Unilever’s ice cream business delivered a €7.9bn ($8.78bn) turnover in 2023.