is the world’s biggest dairy company about to be born?

The dairy world is holding its breath as the French privately owned giant Lactalis, which already owns 29% worth of Parmalat stakes, has furthered its goals to a full take over bid of the Italian dairy company. If the deal is secured it will reportedly create the world’s biggest dairy company. Leaving the politics and the financials to the experts, I wanted to focus on what the business implications would be for the newly formed group if the acquisition goes ahead. Strategically Lactalis and Parmalat have leading positions in complementary product categories and geographical areas. If all under the same roof, the synergies would be unparalleled. The company’s market share, global presence, economy of scale, but also operations optimization would increase dramatically. If as Euromonitor International Ltd reports dairy sales are forecast to increase 13 percent from 2010 through 2015, investing in this acquisition, especially since its at the cheapest valuation for a milk takeover, is a safe bet. Lactalis who acquired the Italian cheese company Galbani in 2006, has since grown the brand outside of Italy to a 17% sales rise overseas last year. With Parmalat, a Lactalis spokesman commented, a stronger Italian business would be created – filling in for Parmalat’s current management – and each company could benefit from the overseas presence of each other. He cited the examples of Parmalat’s presence in Canada and Australia. Lactalis has no presence in Canada and only a fledgling business in Australia. Similarly, Parmalat’s businesses in South Africa and Venezuela could help the French group expand in emerging markets. National sentiments aside, from a business perspective this deal is potentially beneficial for both parties… the rest is all politics.

in India vending machines dispensing milk

The sprawling of vending machines is an ever-growing trend found in both developed and developing parts of the globe. Dispensing anything from pharmaceuticals, cigarettes, sex-relate items, clothing, books, dvds, the vending machine core-business remains that of food and beverages in all its variation. I just read in a Springwise report about a new venture from a forward-thinking dairy company in India. Since my latest visit to Inalpi (read post here) I have found myself quite intrigued by the complexity of the dairy market and the supply/demand forces that revolve around it. Katraj Dairy has just implemented a vending machine (ATM ‘Any Time Milk’) that dispenses milk and dairy products in the city of Pune in Western India. If this proves successful they have plans to install others throughout the region. As suggested in the above mentioned report, buying milk in India can be a time-consuming excercise if you have to stand in a queue at the local co-op or it can be costly if you opt for the milk man to deliver the milk at your home. To the busy IT-workers of Pune, these ATMs may just come as a welcomed addition to the vending machines offerings.

white gold… and legal

If you’re wondering what I’m referring to, the answer comes from a company based in a small village in northern Italy, just a few miles away from the Italian Alps.

With the ever increasing global industry demand and half of the world’s scarce access to the raw material, MILK POWDER, which is in effect nothing short of a commodity, ticks all the right boxes to be a business worth investing in.

I’m referring to an Italian dairy company which, according to management sources, has recently invested into building Europe’s most technologically advanced plant for the transformation of milk into its powdery derivate. Just the other day I visited In.Al.Pi, based near Cuneo, in Italy’s Piedmont region. Typical Italian family run company, its history in the dairy business goes back several decades. The recent partnership with the Ferrero Group which sees In.Al.Pi supplying 15.000 tons of milk powder to the world-renowned confectionery giant, has boosted investments for a state of the art production plant.

In a sector worth 20 billion Euros a year in Italy alone, the number of milk farms has been decreasing since 1983 from 180.000 to only 43.000 today. Thanks to its investments, In.Al.Pi has managed to revive the previously depress local supply market, which plays a vital role for the region’s economy and has gained endorsement and support from regional authorities.

Aside from the production of milk powder and private label production, In.al.pi has its own range of cheeses, butters, spreads which are positioned at the premium end of the market as they claim to be 100% from quality local origin milk. The highlight of my tasting session were the cheese slices (fettine o sottilette) which are made from real milk unlike those of the multinationals competitions and the flavoured butters (truffle, ginger, orange, etc…)!

I’d like to see them bet on the export market with this range of fine dairy products, and I’m sure they’ll have no problem in widening their industry partners worldwide for the milk powder business. Lastly, in my opinion the logical next step for a company that has invested so much in milk powder technology would be to expand into the infant formula business.

for more info http://www.inalpi.it