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Lactalis targets African dairy with Celia takeover

By Chris Mercer , 01-Sep-2006

French dairy firm Lactalis has bought out domestic rival Celia in its latest move to expand, giving the group a foothold in the emerging North African dairy market.

Lactalis announced it had bought Celia, based in Mayenne, France, for an undisclosed fee. It aims to take advantage of Celia's position in the infant nutrition sector and also in North and West African dairy markets.

The move marks the latest in a flurry of takeovers and expansion deals for Lactalis, which in the last year has secured a controlling stake in a joint venture with Nestlé and also bought Italian speciality cheesemaker, Galbani.

The deal for Celia, which has annual sales of around €225m, offers up more new markets to the group. Celia gets 56 per cent of its sales from exports, with Algeria and West Africa its main markets.

A number of Europe's big dairy firms, including Danone and Arla Foods, have shown greater interest in Algeria recently.

Annual per capita consumption of fresh dairy products in Algeria averages only seven kilos, compared with 23 kilograms in Western Europe, demonstrating promising scope for development.

And, dairy sectors in the North Africa/Middle East region have grown by 20 per cent on average for the last three years, eclipsing more modest growth in Western Europe.

Lactalis said it wanted to build up Celia's brands, which include 'Chaussée aux Moines' in cheese, butter make 'le Marin' and 'Picot' in infant nutrition.

The group continues to face trouble in France from producers angry at the drop in farmgate milk prices over the last few years.

Average milk prices paid to French producers have fallen €0.5 over the last five years, the biggest drop across the 15 pre-accession European Union nations. Prices still remain higher than in several neighbouring countries, however.

Protestors were convicted in court for stealing €2,000-worth of milk and cheese from a Lactalis dairy factory and then handing out the products free in local villages. They escaped prison at a hearing in July, and promised to continue the fight against dairy firms.

An industry-wide deal was struck in January to introduce a recommended national milk price, but rows have continued with both Lactalis and its big rival in France, Sodiaal, breaking the agreement this spring.

Lactalis reversed its price cut in July, saying it wanted to respect the national recommendations. The firm then joined the fierce criticism of Sodiaal.

"In some parts of southern France the price difference between us and Sodiaal is as much as €7, which is quite unacceptable," Morelon told DairyReporter.com.