Lactalis CEO Emmanuel Besnier during a meeting at the headquarters of the Brazilian cooperative Itambé in Belo Horizonte, in the state of Minas Gerais, on April 16, 2024 in Brazil (AFP/Douglas Magno)
World leader in dairy products, the French group Lactalis is banking on Brazil, seeking to win over consumers on this continent-country while addressing the serious challenges weighing on local production, starting with low productivity.
Between the French milk giant and Brazil, a huge market and agricultural power on a global scale, the rapprochement seems logical. “We still have very significant development potential,” Thierry Clément, general director of operations at Lactalis, told AFP.
If Brazil is mainly talked about for its production of meat, soya or corn, the country also has a dairy tradition whose star products are cheeses and milk jam.
This is particularly the case in Minas Gerais, a green state in the south-east of Brazil as large as France, which dominates national dairy production.
In Para de Minas, near the regional capital Belo Horizonte, workers are busy around the packaging machines which are running at full speed in one of the five factories in Itambé.
The acquisition in 2019 of this local cooperative, through its subsidiary Lactalis do Brasil, allowed the French group to rise to first place in the dairy market in the country, with a turnover of 2.5 billion dinars. euros in 2023. There are now 22 sites and 12,000 employees.
Yogurts, Swiss biscuits, fermented milk briquettes and “requeijao”, a fresh cheese similar to ricotta, which Brazilians are fond of: 150 products now come out of the factory, which collects 30 million liters of milk per month .
Paul Grasset, general director of the Brazilian cooperative Itambé, during a meeting in Belo Horizonte, in the state of Minas Gerais, Brazil, April 16, 2024 (AFP/Douglas Magno)
Established in Brazil since 2013, Lactalis has also positioned itself in the production of powdered milk, condensed milk and milk jam, “categories where Itambé was strong but where Lactalis was still absent”, explains the general director of Itambé, Paul Grasset, during a press visit at the start of the week on Lactalis’ Brazilian activities and its annual results.
The 100 million euros injected by the group to expand Itambé’s production capacities and develop new products, such as protein drinks and vacuum-sliced cheese, boosted the turnover of the Brazilian brand: that -this has doubled since the acquisition, reaching 900 million euros in 2023.
– Brazilian clients to seduce –
However, there is still a long way to go. Lactalis currently only holds a 13% market share in Brazil.
“Our objective is to reach 20% by 2028 and to improve our profitability through the development of value-added products”, which are still very much in the minority in the customer basket, indicates Patrick Sauvageot, general manager of Lactalis Brazil.
The takeover signed last December of Dairy Partners America Brasil (DPA), a company of the Swiss food group Nestlé and the New Zealand cooperative Fonterra and a major producer of yogurts in Brazil, is part of this logic.
The French group Lactalis, which recorded a turnover of 29.5 billion euros worldwide last year, faces serious challenges in Brazil (AFP/Archives/DAMIEN MEYER)
If Brazil, with its approximately 200 million inhabitants, represents a market with strong potential for Lactalis, the French group, which last year recorded a turnover of 29.5 billion euros worldwide ( +4.3% compared to 2022), faces serious challenges.
Among them, the fragmentation of the sector, the low technical level of breeders, high production costs and the poor quality of milk, which impact the price of dairy products.
The fourth largest producer of milk in the world after losing its third place on the podium occupied by the United States, India and China two years ago, Brazil also imported 9% of the milk consumed on its territory. last year, compared to 3 to 5% in normal times.
“This is explained by much lower prices in Uruguay and Argentina, the main exporters to Brazil”, and where dairy activity is more concentrated and more productive, indicates Glauco Carvalho, of the Brazilian research institute agricultural Embrapa.
In neighboring Argentina, productivity per farm is 3,000 liters of milk per day, compared to 100 liters in Brazil.
Lactalis says it invests with its suppliers to increase their performance. For Mr. Sauvageot, “Lactalis has every interest in making Brazil as competitive as possible.”
However, the group does not plan to export Brazilian products to Europe.
© 2024 AFP
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