In addition, Lala is also in the process of acquiring Arla Foods International's shares of Vigor, increasing Lala’s ownership to 99.99%.
“Lala has been engaged in direct negotiations with Vigor ownership for over a year, and current circumstances in Brazil provide a reasonable price of entry to the market for a high-quality company,” the Mexico-based dairy manufacturer said.
Founded in 1917, Vigor is focused on value-added dairy with a portfolio of various yogurt, cheese, and other dairy products marketed under the Vigor, Danubio, Faixa Azul, Serrabella, Leco, and Amelia brands.
The company's Vigor Greek yogurt brand holds the largest share in Brazil's Greek yogurt market and its combined yogurt brands hold the second largest share of the overall yogurt category in Brazil, according to the company.
“This acquisition supports Lala's vision of becoming the preferred dairy company in the Americas,” the company said in a statement.
With a population projected to reach roughly 216m by 2020, Brazil is the largest dairy market in South America, and is the fourth largest milk producer in the world, according to the FAO. The acquisition of Vigor will help Grupo Lala solidify its presence in the region as well as expand its value-added dairy portfolio.
“We are pleased that Vigor will be the platform for growth of LALA in Brazil. Vigor has the scale, the innovation, and talent needed to build a profitable value-added dairy business,” Grupo Lala CEO Scot Rank said.
‘Clear path for organic growth’
Vigor currently owns 11 milk processing centers, 14 production plants, 31 distribution centers, and 67,000 points of sale in Brazil. The company had reported net revenues of $1.57bn (R$4,928m) for 2016 and projected 2017 revenues of $1.61bn (R$5,024m), an increase of 6.5%.
Itambé Alimentos S.A. manufactures mainly powdered milk, condensed milk, milk caramel, yogurt, dairy products and UHT milk under its Itambé brand.
Vigor has a strong presence in the food service segment and its spreadable dairy business, which represents 34% of the company’s current sales.
“With this acquisition, we see a clear path for organic growth in current business, such as yogurt, cheese, specialty milks, food service and new geographies,” Lala added.