HomeEconomyThe world leader in milk Lactalis is betting on Brazil and its...

The world leader in milk Lactalis is betting on Brazil and its huge market

Cheeses, milk, yogurts… Arrived in Brazil in 2019, French Lactalis is now number 1 in the country.

World leader in the dairy sector, the French group Lactalis is committed to Brazil, seeking to win over consumers in this country-continent and at the same time addressing the serious challenges that weigh on local production, starting with low productivity.

Between the French dairy giant and Brazil, a huge market and agricultural power on a global scale, the rapprochement seems logical. “We still have very important development potential,” Thierry Clément, general director of operations at Lactalis, told AFP.

dairy tradition

If Brazil is mainly talked about for its production of meat, soy or corn, the country also has a dairy tradition whose star products are cheeses and milk jams.

This is particularly the case in Minas Gerais, a green state in southeastern Brazil as large as France, which dominates national dairy production.

In Para de Minas, near the regional capital, Belo Horizonte, workers work around packaging machines running at full speed at one of Itambé’s five factories.

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 euros in 2023. It currently has 22 plants. and 12,000 employees.

Yogurts, Swiss cookies, fermented milk briquettes and “requeijao”, a fresh cheese similar to ricotta, highly appreciated by Brazilians: 150 products now leave the factory, which collects 30 million liters of milk per month.

Established in Brazil since 2013, Lactalis also positioned itself in the production of milk powder, condensed milk and milk jams, “categories where Itambé was strong but where Lactalis was still absent,” explains Itambé’s general director, Paul Grasset, during a press visit at the beginning of the week about Lactalis’ activities in Brazil 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 ​​cheeses, boosted the Brazilian brand’s turnover: it has doubled since the acquisition, reaching 900 million. euros in 2023.

Brazilian clients to seduce

However, there is still a long way to go. Currently, Lactalis only has a 13% market share in Brazil.

“Our goal is to reach 20% by 2028 and improve our profitability through the development of value-added products,” which are still a very minority in the customer basket, indicates Patrick Sauvageot, general director of Lactalis Brazil.

The acquisition signed last December of Dairy Partners America Brazil (DPA), a company of the Swiss food group Nestlé and the New Zealand cooperative Fonterra and one of the main yogurt producers in Brazil, is part of this logic.

If Brazil, with its approximately 200 million inhabitants, represents a market with great 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 farmers, the high production costs and the poor quality of milk, which impact the price of dairy products.

The fourth largest milk producer 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 in its territory last year, compared to 3%. 5% normally. “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, from the Brazilian agricultural research institute 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 Patrick Sauvageot, “Lactalis has every interest in making Brazil as competitive as possible.” However, the group does not plan to export Brazilian products to Europe.

Author: AKM with AFP
Source: BFM TV

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