While the world’s five biggest dairy players continue to maintain a firm hold on their positions for another year, Rabobank’s annual survey into the industry’s top 20 giants is notable for the ongoing rise of Chinese players and the slippage of US companies in 2013.
Having only featured for the first time five years ago, two Chinese companies have continued their ascent up the list of the world’s top 20 dairy players. This year, Yili jumped three places to number 12 on the list on the back of exceptional organic growth in the Chinese dairy market, while Mengniu ranked in at number 15.
“While the top five remain unchanged, there are now two Chinese companies in the top- 15. There were none in the top 20 until 2008,” said Rabobank analyst Tim Hunt. “In contrast the lack of a US-based global consolidator is seeing the rankings of US companies decline.”
Impact on global market
The Chinese government’s desire for domestic consolidation and vertical integration, together with local market growth, will almost certainly underpin further growth of these Chinese giants over the coming years.
And, according to Rabobank, the world market is likely to see at least one of them enter the top 10 in the next 12 months as both companies continue to expand their presence beyond their own shores.
“Whether they intend to play inside of China or not, dairy companies outside of the country should be developing their understanding of these players, what drives them and what sort of partners and competitors they will make in the future,” Hunt wrote in the report.
“They will be a prominent part of the industry for many years to come.”
The Rabobank survey highlights the giants of one of the world’s most dynamic food sectors. Data is based on dairy sales only according to 2012 financial returns and mergers and acquisitions completed between January 1 and June 15 this year—although the pending acquisition by Mengniu of compatriot Nashili.
US loses from China’s charge
“With the rapid growth of the Chinese giants, it is quite possible that the US giants will be pushed further down the list in coming years, with the global landscape largely being shaped by others at present,” added Hunt.
“Size should not be a goal in itself, and US companies can participate in growth offshore by developing their export businesses.
“However, with much of the growth opportunities in dairy likely to come outside of the US in coming years, US companies will need to think about whether being an unaligned exporter with no offshore footing will be enough to secure a fair share of the growth and value available in coming years.”