Fonterra has fallen three places to ninth in Rabobank’s annual Global Dairy Top 20 report as it continues to dispose of non-core assets while adjusting to pressure on milk volume growth.
Fonterra sold its Chilean subsidiary Soprole in early 2023, resulting in an estimated drop in revenue of about US$800 million (about $1.3 billion). Its sale of DPA Brazil, a joint venture with Nestlé, to Lactalis is pending.
French company Lactalis held the top spot on the Global Dairy Top 20 and Dairy Farmers of America in the United States moved up to second place, pushing Nestlé (Switzerland) into third.
French company Danone slipped one place to fourth, Chinese company Yili remained unchanged at fifth, Danish-Swedish company Arla Foods jumped from ninth to sixth, Dutch company Friesland Campinia overtook Chinese company Menginu in shifting from eighth to seventh and Canadian company Saputo was unchanged at 10th.
Only five of the top 20 companies retained the same position as last year with a major reshuffle in the revenue performance of the world’s largest dairy companies occurring over the past 12 months.
“A stronger US dollar influenced position changes in the ranking with the combined turnover of the top 20 companies jumping 7.4% in US dollar terms, following the prior year’s gain of 9.3%,” the report said.
Fuelled by a second round of war-induced inflation, European Union dairy product prices rallied to new annual average highs.
“In Oceania and the US, milk powder prices were also elevated. At the same time, lower-than-anticipated milk production growth in the main exporting regions and decent domestic demand contributed to an overall tight dairy market with limited exportable surpluses during most of 2022,” it said.
Rabobank dairy analyst Richard Scheper said overall, year-on-year average price gains in butter, cheese, milk powders, and other dairy products set the stage for double-digit turnover growth in local currencies in 2022.
“In the end, most turnover gains were absorbed by exploding costs, leaving little on the companies’ bottom lines,” he said.
“Many dairy companies paid record-high average farmgate milk prices to offset large farm input costs. At the factory gate, rising energy costs and the availability of natural gas – especially in Europe – were the largest concerns for energy-intensive dairy processing.
“Costs for other components, such as logistics, packaging materials, and labour, also escalated in 2022.”