New Rabobank Dairy Quarterly spotlights ‘The Delta Blues’

September 10, 2021

UTRECHT, The Netherlands — Global dairy demand has proven resilient to all but the most extreme forms of pandemic-induced lockdowns so far. While some regional disruptions will continue to occur and uncertainty remains, the potential for major global demand shocks is limited. However, lockdowns often are strict and extreme in emerging markets in Southeast Asia, and with less government aid expected this year, longer-lasting economic impacts may take hold, says Rabobank’s Global Dairy Quarterly Q3 2021 report, “The Delta Blues.”

Rabobank notes global milk supply has been on an extended run of uninterrupted growth, which is expected to continue, but at a slower pace. The growth rate has been sustainable without becoming overly burdensome on markets so far, but any slowdown in global demand could quickly lead to inventory build, the report says.

Farmgate milk prices generally are on the high side across much of the world, but rising costs of inputs and downside risk in milk prices are giving many producers the blues, the report notes. U.S. dairy farmers already are experiencing relatively lower milk prices following a year of strong production growth, leading to a saturated milk market.

“The U.S. market has experienced heavier milk supplies that continue to weigh on milk prices, and (European Union) EU milk prices are barely keeping up with the rising input costs,” says Ben Laine, dairy analyst at Rabobank.

The report adds that farm margins around the world are mixed. High feed prices and general input cost inflation are common threads, but the ability to withstand the cost pressures depends on the milk price. Much of the world is experiencing high enough milk prices to offset higher costs.

At the same time, feed costs generally are higher without much hope on the horizon for a turnaround, the report notes. Drought-stricken corn crop conditions in the United States are bleak and keeping prices elevated, though demand destruction limits additional upside.

The report notes that the demand outlook for the United States still is subject to ongoing uncertainties around COVID variants, but the impacts on consumer demand will be limited. The foodservice sector and consumers have adapted to varying restrictions, but many restaurants continue to operate at a reduced schedule or a reduced menu due to challenges in finding workers.

Meanwhile, logistics disruptions are leading to higher costs but not impacting the fundamental underlying
supply and demand, Rabobank notes. Exports have remained strong throughout the pandemic, and buyers have become more opportunistic, preemptively stocking up on products when containers are available. In the long run, however, these costs will add up and potentially curb demand.

A slowdown in import demand from China is expected to begin in the second half of 2021 and could weigh on global dairy commodity prices, the report adds. Supply is outpacing demand in China, with domestic production growth combined with growing inventories. These factors point to the potential for a period of destocking later this year and into 2022.

In addition, aggressive zero-tolerance lockdown policies for COVID-19 cases in China have led to and could continue to lead to sporadic shutdowns of ports, making matters worse, the report says.

“However, despite logistics problems, dairy commodities have continued to move through global markets,” Laine says.
Rabobank notes that the near-term peak in global dairy commodity prices likely is in the rear-view mirror. Prices cooled in the second quarter and will be heavily dependent on import demand for the rest of this year with all eyes on China as a source of risk to the downside, the report says.

While the macro-economic picture continues to improve, concerns about the delta variant have led to some downward revisions from previous expectations. Real gross domestic product (GDP) in the United States for the second quarter was above the pre-pandemic level of the fourth quarter 2019, the report notes. Throughout the world, GDP growth is being primarily driven by consumer purchasing, while investments remain mixed.

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Hurricane Ida leaves some dairy damage on East Coast

September 10, 2021

By Rena Archwamety

MADISON, Wis. — In the wake of the deadly Hurricane Ida, which last week left a trail of destruction, flooding and residual storms across Southern and Eastern U.S. states, some dairies in the region saw heavy rains and power outages, while one dairy farm in New Jersey was nearly flattened by a tornado.

Wellacrest Farms in Mullica Hill, New Jersey, was devastated by a tornado that ripped through the operation the evening of Sept. 1. The largest dairy in the state, Wellacrest Farms produces more than 17 million pounds of milk a year and has delivered dairy to customers for almost 80 years, according to a GoFundMe organized for the farm and its family’s losses.

In addition to losing a number of cows, many of the barns, grain silos, equipment for the field and barnyard, and fields that were planted for fall harvest and winter feed are completely lost, states the GoFundMe, which had raised nearly $92,000 as of Thursday.

USDA’s Dairy Market News reported this week that throughout the East region, Hurricane Ida caused damage to grain silos, equipment, roofing, barns and dairy herds. It notes that USDA offers a disaster tool for farmers and ranchers at www.farmers.gov/protection-recovery/disaster-tool#step-1.

Meanwhile, some co-ops with members in this region report minimal damage and interruptions.

“We’re fortunate that we only had to divert one load due to a flooded road,” says Amber Sheridan, director of corporate communications for Agri-Mark, which has members throughout New England and New York along with four manufacturing plants in this region.

Dairy Farmers of America (DFA) reports that one of its farms had some flooding, but overall the cooperative has experienced very minimal impacts in its Northeast and Southeast areas.

“Thankfully this storm only brought rain and some power outages, so there have been limited challenges for our farm families, and many of them have generators. DFA field staff have responded to any on-farm issues, ensuring members are safe and connecting them to applicable programs, including state and local resources,” DFA says. “We also try and prepare ahead of time to get plants in the affected areas milk before the storm hits, so they can process and then shut things down to minimize employees being on site.”

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WASDE lowers milk production, raises price forecasts in report

September 10, 2021

WASHINGTON — Milk production forecasts for 2021 and 2022 are reduced from last month on smaller dairy cow numbers and lower milk per cow, says USDA in its latest Supply and Demand Estimates report released today.

Milk production in 2021 now is forecast at 227.8 billion pounds, down from 228.1 billion pounds forecast last month. The 2022 milk production forecast is lowered to 230.6 billion pounds.

For 2021, the fat basis import forecast is unchanged from the previous month, while the fat basis export forecast is raised on strong sales of cheese, butter and milkfat, USDA says. The skim-solids basis import forecast for 2021 is unchanged from last month, but the export forecast is raised on firm global demand for skim milk powder (SMP), cheese and whey.

For 2022, the fat basis imports are raised on strong demand for imported cheese, while the fat basis export forecast is raised as U.S. butter is expected to be remain competitive in international markets, USDA says. No change is made to the 2022 skim-solids basis import forecast; however, skim-solids basis exports are raised from last month on continued strong global demand for SMP and whey.

For 2021 and 2022, cheese, butter and nonfat dry milk (NDM) price forecasts are raised on improving demand and lower production. Cheese now is forecast to average $1.640 per pound in 2021, while butter is forecast to average $1.690 and NDM $1.225.

For 2022, cheese is forecast to average $1.655 per pound, butter $1.730 and NDM $1.270. The whey price forecast is unchanged for 2021 and 2022, at $0.555 and $0.500 per pound, respectively.

The 2021 and 2022 Class III and Class IV price forecasts are raised from last month on higher dairy product prices, USDA says. Class III is projected to average $16.65 per hundredweight in 2021 and $16.45 in 2022, while Class IV is forecast at $15.55 in 2021 and $16.05 in 2022.

The 2021 all milk price is forecast higher at $18.15 per hundredweight, up from $17.95, and at $18.40 in 2022, up from $17.85 forecast last month.

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Industry organizations make safety a priority during events

September 3, 2021

By Rena Archwamety

MADISON, Wis. — After a year of scheduling in-person gatherings largely on hold, many dairy industry organizations recently have resumed in-person contest, trade shows, networking opportunities and other events. While these events bring a sense of normalcy, the hosting organizations also face a “new normal” that requires balancing face-to-face opportunities for members and attendees with prudent health and safety measures.

The American Dairy Products Institute (ADPI) is planning to host two live events in Reno, Nevada, Oct. 25-28 — the ADPI Dairy Ingredients Technology Symposium and the Global Cheese Technology Forum — during its “Dairy Technology Week in Reno.”

Earlier this week, ADPI released its amended attendance guidelines for hosted events and activities. ADPI outlines that attendance to all direct-facing events and activities shall be open to those who have been properly vaccinated, or those who have not been vaccinated but can provide proper documentation of having received a negative COVID-19 test within three days of their arrival to the event. All attendees also will agree to comply with the masking and social distancing protocols in effect at the venue or event site.

“We believe that our attendance requirements broadly sync with both in-person interaction and the health and safety protocols as recommended by the health officials/experts at this point in time,” says Blake Anderson, president and CEO, ADPI.

He says the reason ADPI published its guidelines is that, up to now, there has been a void in “common industry practices” as the pandemic and its impacts have been very different depending on locations, venues and vaccination trends.

“We all initially thought that by now the original COVID-19 pandemic would be more under control and on the wane, and then along came the delta variant and reset everyone’s expectations,” Anderson says. “COVID-19 is called a ‘novel virus’ for good reason, and we all need to keep that top-of-mind as we deal with it.”

ADPI developed its event guidelines with the input of its board of directors as well as feedback from other various ADPI members-at-large. Anderson says feedback for the most part has been extremely positive, and ADPI feels its guidelines are fair, equitable and easily complied with.

“We have a very diverse membership base encompassing processors, producers, sellers, marketers, equipment and service providers in and to the industry, and as such enjoy the benefit of broad and strategic thinking on such matters and their impacts,” Anderson says. “ADPI is an organization of, for and by members, and the same is reflected in our guidelines.”

He adds, “A critical component of our guidelines is that people know what is expected and can assess their abilities to comply in advance. If for some reason compliance is not possible for any number of reasons, we are providing options to enable them to still participate and benefit from the experience, i.e., virtual attendance versus direct facing. The key is everyone will have a choice that they can make based on their own personal circumstances.”

The National Milk Producers Federation (NMPF) has held all of its board of directors meetings virtually, using Zoom, since March 2020. Its annual meeting last October also was virtual. However, NMPF is planning for its November 2021 board meeting to be an in-person event.

“We will be following the public health requirements of local authorities in Las Vegas, where our November meeting is being held. Currently those guidelines require masking in public spaces; that may change based on the evolution of case rates during the fall months in Nevada,” says Chris Galen, senior vice president, member services and strategic initiatives, NMPF.

All organizations that hold meetings have learned over the past 18 months to be flexible and use different tools, while also balancing the expectations of members that certain interactions are optimized with in-person engagement, Galen adds.

“While we are hoping for a more ‘normal’ approach to meetings and events in the future, the shared experience of the past year-and-a-half is certain to require some new approaches after 2021,” he says.

All events hosted and sponsored by the International Dairy Foods Association (IDFA) have been virtual since its in-person Dairy Forum that was held in January 2020. IDFA staff also continues to work remotely.

“As we look ahead to in-person events later this year or in early 2022, health and safety is our top priority,” says Matt Herrick, IDFA senior vice president of public affairs and communications and executive director of the IDFA Foundation. “We will continue to adhere to CDC recommendations as well as state/local guidelines and work collaboratively with our on-site partners — such as hotels and conference centers — to put health and safety first.”

The Wisconsin Cheese Makers Association (WCMA) also has adjusted many of its events this past year, canceling its World Championship Cheese Contest in March and switching to a virtual CheeseExpo in April of this year. WCMA is offering virtual options for its upcoming Dairy Food Safety Alliance meeting Sept. 9. However, it plans to return to hosting an in-person World Championship Cheese Contest and CheeseExpo in 2022.

“We’re all eager to be together, as colleagues and as friends, once again,” says John Umhoefer, executive director, WCMA. “We are constantly reviewing public health guidance and will make determinations on safety measures for these events in the coming months. Our top priority is the health and safety of our participants, so safety guidelines for these events will evolve to match public health guidance.”

While many organizations have switched mostly or entirely to virtual events and meetings, the Wisconsin Dairy Products Association (WDPA) has continued its in-person events, though with added precautions. Executive Director Brad Legreid says the association did not make this decision lightly.

“We had hours and hours of discussion, planning and studying COVID regulations, not only in the county and state, but also federal guidelines,” he says. “Between our staff and board of directors, we came to the conclusion that what was best for our members was to hold safe events this last year.”

Since it was safer to be outdoors and golf courses remained open, WDPA held a golf outing in September 2020, providing face masks and individual hand sanitizer bottles to all participants. A month later, instead of its traditional Dairy Symposium, WDPA hosted an outdoor evening reception along with a golf outing in Door County, Wisconsin. Hand sanitizer, masks and social distancing again were provided and encouraged.

After COVID-19 guidelines and restrictions relaxed this spring, WDPA this year continued to host its golf outing and traditional Dairy Symposium and saw record turnouts. It also resumed hosting the World Dairy Expo Championship Dairy Product Contest, and judging took place last month while following face masking and social distancing requirements in Madison, Wisconsin.

Legreid notes that WDPA’s decision to continue holding in-person events with extra safety precautions was driven by its members’ desire to meet face-to-face. He adds that each organization must do what works best for them and their members, and different approaches are just as respected.

“As you know, the dairy industry is a very social industry,” he says. “We take it very seriously. When we do hold an event, and it’s successful, and we see smiles, hear laughter and can see each other again, it makes it all worth it.”

Without question, the dairy ingredients and related products industry is “people-centric,” focused on relationships and trust, Anderson says. He adds that ADPI pivoted to virtual events over the last year-and-a-half rather than canceling them because members needed to remain connected and informed.

“It is critically important to all of us to resume in-person meetings to enable relationships to be built and developed,” he says. “Our businesses did not stop, but it did take on many different dimensions in facing and adapting to ‘pandemic’ times and challenges. If we in the dairy products industry are nothing else, we are resilient!”

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Emmi Roth acquires Athenos Feta brand from Lactalis Group

September 3, 2021

FITCHBURG, Wis. — Emmi Roth, in partnership with Emmi Group, this week announced it has acquired Athenos, which includes the No. 1 Feta in the United States. This acquisition from the Lactalis Group complements Emmi Roth’s extensive range of high-quality locally produced and imported specialty cheeses and strengthens the company’s long-standing dedication to the specialty cheese industry, Emmi Roth says.

“This is an exciting day for Emmi Roth,” Tim Omer, president and managing director at Emmi Roth, said in yesterday’s announcement. “We’re continuing to focus on the specialty cheese industry that we really care about. We take pride in providing the best specialty cheese to our customers and consumers, and adding Athenos to our family will strengthen our product range and allow us to offer another great line of products.”

As the leading Feta brand in the United States, Athenos generated net sales of almost $90 million in 2020. Emmi Roth notes Feta has benefited from recent changes in consumer consumption habits, and volume sales in the Feta category are up 22% versus last year, according to IRI data. Emmi Roth adds Athenos also will benefit from its strong retail and foodservice connections as well as its marketing expertise to reach new consumers through digital marketing and social media.

Kraft Heinz agreed to sell the Athenos business to a U.S. affiliate of Lactalis Group in autumn 2020 as part of a natural cheese transaction previously announced by the companies. In fulfillment of conditions identified during the customary antitrust review, the Lactalis Group agreed to sell the Athenos business on to Emmi.

Emmi’s acquisition of the Athenos business includes the rights to the Athenos brand as well as other existing rights and contracts in connection with this business. The products themselves have been contract manufactured, processed and distributed to order for many years, and Emmi says it plans to preserve this established value chain. The transaction remains subject to final approval by U.S. regulators. The parties have agreed not to disclose the purchase price.

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U.S. dairy export volume rises 7.2% in July over a year ago

September 3, 2021

WASHINGTON — U.S. dairy exports in July totaled 195,029 metric tons (milk solids equivalent), up 7.2% from July 2020, according to the latest data reported by the U.S. Dairy Export Council (USDEC). U.S. dairy exports in July were valued at $667.9 million, up 20.6% from a year earlier, thanks to a surge in higher-value products in addition to overall volume growth, USDEC says.

Skim milk powder and nonfat dry milk (SMP/NDM) exports in July totaled 72,990 metric tons, down 3.1% from July 2020. USDEC reports SMP/NDM exports to Mexico increased 14%, while shipments to were down 30% to Southeast Asia, likely due to continued port congestion in the United States.

Dry whey product exports in July totaled 53,384 metric tons, up 17.8% from volumes a year earlier, led by sales to China which were up 33% over July 2020, USDEC reports.

U.S. cheese exports in July totaled 36,804 metric tons, up 26.8% from year-ago exports. Cheese shipments were up in all of the top markets: 4% in Japan and Korea, 23% in Mexico and 83% in Latin America. USDEC says a combination of factors appears to be driving gains in Mexico and Latin America, including favorable pricing, vaccination progress and economic reopenings, and improving tourism numbers.

Exports of lactose totaled 32,165 metric tons in July, down 2% from a year earlier. Shipments were up in Southeast Asia and Japan and Korea, and down in China, USDEC says.

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USDA announces details of new Dairy Donation Program

August 27, 2021

WASHINGTON — USDA Deputy Secretary Jewel Bronaugh this week announced the establishment of a $400 million Dairy Donation Program (DDP) on a call with Senate Agriculture Committee Chair Debbie Stabenow, D-Mich. The DDP, established by USDA’s Agricultural Marketing Service (AMS) in accordance with the Consolidated Appropriations Act of 2021, aims to facilitate timely dairy product donations while reducing food waste.

The establishment of DDP is part of $6 billion of pandemic assistance USDA announced in March and follows last week’s announcement of the $350 million Pandemic Market Volatility Assistance Program for dairy farmers. (See “USDA announces assistance for dairy, DMC improvements” in last week’s issue of Cheese Market News.) It is the second part of a more than $2 billion comprehensive package to help the dairy industry recover from the pandemic and improve or establish programs to make it more resilient to future challenges.

Under the DDP, eligible dairy organizations will partner with nonprofit feeding organizations that distribute food to individuals and families in need. Those partnerships may apply for and receive reimbursements to cover some expenses related to eligible dairy product donations. DDP was inspired in part by the donations made by Michigan Milk Producers Association in conjunction with the Food Bank of Eastern Michigan in response to the Flint water crisis, USDA notes.

“The benefits of the Dairy Donation Program are twofold — it supplements other financial support for producers while providing nutritious dairy products to American families,” Bronaugh says. “When there is surplus milk production, we encourage the milk be donated instead of being dumped. Together we can help someone in need, minimize food waste and support the U.S. dairy industry.”

Stabenow says the Dairy Donation Program is a win-win for farmers and families.

“It will be easier for dairy farmers to donate milk and other dairy products, which in turn helps feed vulnerable Americans, including our children,” Stabenow says. “Michigan dairy farm families and food banks continue to lead by example. I am proud of the role they played in pioneering this initiative which has become a model for the nation.”

Dairy farmers, cooperatives or processors that purchase fresh milk or bulk dairy products to process into retail-packaged dairy products and meet other requirements are eligible to participate. Costs reimbursed through the program include the cost of milk used to make the donated eligible dairy product and some of the manufacturing and transportation costs. Reimbursement of these costs is designed to help offset some of the costs associated with processing and donating eligible dairy products.

Program details are available at www.ams.usda.gov/ddp. Interested partnerships must apply by completing and submitting a Dairy Donation and Distribution Plan. Upon plan approval, partnerships will be able to submit claims and supporting documentation to obtain reimbursement for eligible dairy products donated since Jan. 1, 2020.

Entities participating in the Milk Donation Reimbursement Program (MDRP) automatically will be enrolled in the Dairy Donation Program.

The interim final rule formalizing the program soon will be published in the Federal Register and will provide eligible handlers and cooperatives procedures on how to participate in the program. The program becomes effective one day after it is published in the Federal Register. A preview of the interim final rule is posted on the AMS website.

U.S. dairy stakeholders including the International Dairy Foods Association (IDFA) and National Milk Producers Federation (NMPF) offered their support for the DDP.

“IDFA applauds USDA for finalizing the Dairy Donation Program, making it possible for U.S. dairy companies to donate fresh, nutritious dairy products to nonprofit organizations reaching Americans struggling with hunger and food insecurity. Since the start of the COVID-19 pandemic, U.S. dairy producers and dairy foods companies have led efforts to feed the hungry and support struggling communities. With the Dairy Donation Program announced (this week), USDA is providing our industry with one more tool to reach Americans in need,” says Michael Dykes, president and CEO, IDFA. “The dairy industry welcomes the opportunity to continue to partner with nonprofits, charities and other organizations working to combat hunger and nutrition insecurity. The Dairy Donation Program ensures high-quality, nutritious products like milk, cheese, yogurt and more will get to those who need them most, while ensuring dairy food producers receive a fair market value for their healthy products. IDFA and our members look forward to working with USDA and the nonprofit community to get this program off the ground this fall.”

Jim Mulhern, president and CEO, NMPF, adds that dairy stakeholders are eager to enhance their partnerships with food banks and other distributors to provide dairy products to those experiencing food insecurity, which the COVID-19 pandemic has only exacerbated.

He notes NMPF championed the proposal throughout the legislative process and worked closely with Stabenow, who led the effort to include this new program in COVID-19-related legislation enacted last year.

NMPF also worked closely with USDA to ensure that the program addresses additional costs, such as processing and transportation, as well as other elements that make the program more viable. The provision covering the cost of processing is a significant enhancement from the previous program, Mulhern says. NMPF also worked closely with Feeding America to support the program and recommend approaches to ensure its effectiveness.

“We are grateful to USDA for helping ensure wholesome dairy products can be provided to food banks and other food distributors by reimbursing for some of these costs,” Mulhern says. “We have also been pleased to work with Feeding America to advance the partnership approach taken by this program as it will help to target dairy donations in a manner that effectively meets on-the-ground demand.”

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Glanbia webinar delves into COVID impacts on MegaTrends

August 27, 2021

FITCHBURG, Wis. — Since March 2020, the insights team at Glanbia Nutritionals has conducted continuous proprietary COVID-19 consumer research to gain a greater understanding on what consumers are buying, what they’re eating, how they’re exercising and other ways that consumer trends are shifting. Glanbia Nutritionals’ monthly COVID Consumer Tracker covers behavioral and attitudinal questions about product consumption, channel purchases, grocery spend, foodservice visitation, exercise level and more. Through this research, the company says it has a pulse of how the pandemic will continue to shape food and beverage consumer behavior in the future.

A recent webinar highlighted major findings from this research, including how COVID-19 has impacted Glanbia’s food and beverage MegaTrends: “Generation Me,” “Building a Lifestyle,” “Ultra-Personalization,” “Sustainability Matters” and “Sense-ational,” as well as the minitrends that have seen the most change over the past year. For 2021, Glanbia’s megatrends and minitrends have not necessarily changed, but the way in which consumers experience and engage with many of them did. Highlights include:

• Generation me

There are commonalities and variations in pandemic response from each generation, according to data from Glanbia Nutritionals.

The importance of immune system support has increased substantially, with varied responses by generation. Boomers are more likely to reach for beverages that are fortified with immune system supporting ingredients, while Gen X is more likely to prefer eating foods that are fortified with immune system supporting ingredients. Meanwhile, millennials and Gen Z are more likely to reach for beverages that are naturally high in immune system supporting ingredients.

More than a quarter of all respondents indicate they will spend more on vitamin and mineral supplements (VMS) in the future. Boomers are more likely to spend more on VMS and spend less on snacks and sweets. For Gen Z, about one-third of them will spend more on VMS but also will spend more on snacks and sweets.

• Building a lifestyle

The COVID-19 experience has brought about a new emphasis on health and wellness for many consumers. Glanbia Nutritionals says manufacturers should anticipate sustained consumer interest in products that are supportive of generalized wellness as well as specific health needs. The research shows that messaging that focuses on the health-supporting aspects of snacks will help garner attention and exploration from consumers.

Consumers want products, especially snacks, that are low in sugar, calories, salt and carbs. They also want products that are high in protein, made with good fats, and have added vitamins and minerals, according to recent data.

There are strong generational differences between what constitutes “clean label” and “better for you”: 43% of Boomers prefer to have foods or beverages made with simple, real ingredients, while 43% of Gen Z prefers to have something labeled as “No preservatives, artificial ingredients, high fructose corn syrup or trans fats.”

Older consumers are concerned with moderating their macro intake and having food and drinks that offer special health benefits. Younger consumers are more focused on authentic global flavors or using food or drink occasions to connect with others socially.

Additionally, consumers are placing increasing importance on mental and emotional health due to COVID-19 and are looking for products with science-backed ingredients that can boost brain health or offer stress relief.

• Ultra personalization

By focusing in on what consumers want, messages can be crafted around why a particular food or beverage is “just right” for that consumer. Glanbia Nutritionals says the pandemic has had wide and varying effects on the many ways people eat and the importance of convenience.

Due to COVID-19, research shows that 25% of consumers who are working or studying at home have changed how they snack, with the majority actually seeking out more fresh fruits, vegetables and more nutritious snacks.

Even with many consumers working from home and social activities disrupted, ease of consumption and preparation still are the top criteria when choosing a snack, according to Glanbia. Portability is still important to some consumers but not nearly as important as it was more than a year ago.

• Sustainability matters

The company notes that COVID-19 has sensitized consumers to the needs of others, and consumers expect companies to be a part of the positive impact — not only on people but on the planet. Environmentally friendly programs are becoming more important as consumers demand action on climate change.

Meanwhile, consumers are concerned with visible sustainability issues, such as single-use plastic waste, and many are looking beyond the pandemic to the rising global crisis of climate change and global warming.

• Sense-ational

The COVID-19 pandemic also has brought about a heightened desire for nostalgic flavors and formats, particularly in snacks, the company says. There is an increasing desire among younger consumers to experience new and more global flavors. In some markets, indulgent categories have recognized the importance of emotions and have added on-pack messages about the potential feelings associated with a product.

Concerns regarding hygiene, worker shortages and worker interaction are driving consumers to prefer less physical interaction. As a result, Glanbia Nutritionals says it is seeing the introduction of solutions that address consumers’ current concerns such as food delivery robots in restaurants, food preparation robots, contactless payment transactions and touchless grocery carts.

• COVID-19

The webinar also discussed COVID-19 specific data and information that may affect consumer trends in the future. With wide-scale vaccination efforts underway, surveys show that consumers are feeling more positive about normal activities resuming in the next few months. The April 2021 survey shows 30% saying it will be safe to resume normal activities “in the next few months,” 23% saying “not before summer of 2021” and 22% saying “not before the end of 2021.”

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Rabobank Global Dairy Top 20 shows M&A activity fell in 2020

August 27, 2021

UTRECHT, the Netherlands — Rabobank’s latest annual Global Dairy Top 20 report shows that the combined turnover of the top 20 industry leaders fell by just 0.1% in U.S. dollar terms, following the prior year’s 1.8% gain. In euro terms, the combined turnover decreased by 1.9%. Merger and acquisition (M&A) activity slowed in 2020, with approximately 80 announced deals versus the prior year’s 105. Activity picked up in 2021, with more than 50 deals announced through midyear, the report says.

In 2021, privately held Lactalis unseated longtime industry titan Nestlé as the world’s largest dairy company, according to Mary Ledman, global dairy strategist for Rabobank.

“Lactalis’ attention to organic growth, as well as its dedicated global M&A strategy, propelled the company from ninth place in 2000 to a dominating lead position in 2021,” Ledman says.

Rounding out the top five after Lactalis and Nestlé are Dairy Farmers of America (United States), Danone (France) and Yili (China). Other U.S. companies ranked in the top 20 include Kraft Heinz (15) and Schreiber Foods (19).

In 2020, dairy companies faced significant challenges due to the COVID-19 pandemic, but overall, the sector fared better than expected, demonstrating its resilience, the report notes. The pandemic also heightened consumers’ awareness of environmental challenges.

“Consumer sentiments are being heard, and many companies included in the Global Dairy Top 20 have made sustainability commitments for 2030 and carbon-neutrality commitments for 2050,” according to Richard Scheper, dairy analyst for Rabobank.

He notes that according to New York University’s Stern Center for Sustainable Business, sustainability-marketed U.S. milk sales grew more than 20% from 2013 to 2018, compared to negative growth for the category as a whole. Sustainability-marketed natural cheese and yogurt sales grew more than 30% and 20%, respectively, compared to near 10% growth for those categories broadly over the five-year period.

The sales growth of liquid milk and yogurt alternatives — especially oat- and almond-based alternatives — have not gone unnoticed, the report says. Most significantly, Danone’s turnover in dairy alternatives, following its acquisition of WhiteWave Foods in 2017, was recorded at EUR 2.2 billion (US$2.5 billion) in 2020, a gain of 15% compared to the previous year. Adding these sales would lift Danone to third position (it’s currently in fourth). Dairy alternative company Oatly surged in market capitalization, to more than US$10 billion after its IPO debut in May 2021.

“The designation of dairy is also becoming more blurred as hybrid products, containing both dairy and plant-based ingredients, enter the marketplace,” Scheper says.

Rabobank anticipates investment activity to stay robust in the on-trend channels and categories, including specialty cheese, innovative dairy ingredients like human milk oligosaccharides, dairy alternatives ranging from plants and fermentation to cell-based, and lifestyle nutrition. In addition, acquisitions in adjacent sectors, such as logistics and inventory management, are likely.

At the farm level, the rising cost of production due to drought-induced higher feed costs and inflationary pressures will keep margins tight, limiting milk production growth in major exporting regions to less than 1.2%, the report says.

In the past two decades, the Global Dairy Top 20 saw consolidation as a constant, and this is expected to continue. From 2001 to 2020, the combined turnover of the top 20 companies more than doubled, expanding by 3.8% annually. From 2010 to 2020, China rose, evolving as a dairy-consuming nation and the world’s largest dairy importer. The two Chinese dairy giants — Yili and Mengniu — have ambitious growth targets and are proactively looking for overseas growth opportunities, the report says.

Over the next decade and beyond, changing demographics will drive dairy opportunities. More than 35% of the population growth will occur in Africa, which remains a net — and growing — dairy importer, largely importing from international players in the Global Dairy Top 20. Still, there will be pockets of flourishing regional domestic production growth, such as in East Africa, based on the availability of natural resources and social, economic and political stability, the report says. Similarly, Indonesia remains a growing market for global dairy exporters.

China will continue to reign as the world’s largest dairy importer, the report adds. Rather than being dominated by the infant nutrition market of the past two decades, China’s dairy sector will find growth in the “Active Silvers” (i.e. people over 50 years old) market. The U.S. and EU-27 markets are expected to be aging and affluent, attracting innovation and competition.

“By 2030, we anticipate that consumers will have the option to buy competitively priced plant-based and cell-cultured dairy alternatives, with non-GMO-sensitive consumers opting for the plant-based alternatives,” Ledman says. “Natural dairy’s nutrient density will keep it a dietary staple. But, it is also imperative that the dairy sector be part of a global carbon-reduction solution that resonates with climate-sensitive consumers and prevents food manufacturers and foodservice operations from taking natural dairy out of their products and off their menus.”

CMN

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