Why are the dairy múltis covet the Brazil

The Brazil is today, more than ever, a strategic country for the dairy multinational. With a market with strong growth potential and positive perspectives for the production of milk-in addition, of course, have assets for sale-, the country attracts the interest of companies that are not yet around here or have restricted presence, beyond those who already have a consolidated position in the national territory.
The recent offers made by dairy assets put up for sale by the BRF and the units that will be disposed of by the LBR-Brazil gives an idea of the Dairy importance that the country won the Board of large multinationals in this segment.
The BRF, which earlier this year put on sale their dairy operations, received French offers for Lactalis, the largest in the world collection of milk, the French Danone, also of Mexican Lala, beyond Canadian industry sources, according to Saputo. The expectation is that the buyer's name be known soon.
Units of the LBR, put up for sale within a process of reorganization, had proposed also for Lactalis, the Venezuelan Unaquita, besides the Brazilian Force (controlled by J&F), Itambé (controlled by the Force and by the Central Cooperative of rural producers of Minas Gerais), among other nationals. A creditors ' meeting will analyze the best proposals next Monday.
Among foreign women interested in dairy assets in Brazil, the for Lactalis, which in 2013 bought the little cheeses Balqis, has been showing more aggressive. A sign of how crucial is considered to be in the Brazilian territory. The company, incidentally, have you tried to buy control of the LBR in 2013, before the adoption of the plan for reorganization of the Brazilian company, but the transaction failed.
According to industry sources, while making bid for assets of both the BRF as the LBR, the French company seeks to have a good structure of milk and also tries to recover the Parmalat brand, which, in Brazil, is in the hands of the LBR, under license until 2017. The for Lactalis is the controller of the Italian Parmalat S.p.A since 2011, and therefore, owner of the mark.
"The for Lactalis is already in Brazil [indirectly with the Parmalat brand] and wants to protect that position," said a person familiar with the matter.
Through the affiliate, Brazil for Lactalis Parmalat S.p.A-, the French group has proposed to pay $ 150 million for five of the LBR, the so-called isolated production units (UPIs): Leader, farm Vila Nova, Barra Mansa, Good cream and Poços de Caldas. Arguing that "the Parmalat S.P.A has credits in the face of the LBR" on the brand, the license for Lactalis posed as to the purchase of UPIs etching that all trademark usage contracts existing today are terminated and Parmalat all rights provided for in the contracts for use of the trademark are returned to the Parmalat S.p.A. Furthermore, the LBR would have to discontinue the use of any and all Parmalat brands (periods of grace established respected in the contracts of use).
In its proposal, the for Lactalis argued that "after ten years without direct presence in Brazil, Parmalat would like to take the opportunity to administer directly your brand in country that represents 200 million consumers, and features a large development potential for the dairy industry". In addition, he said that "establishing a significant presence in Brazil, one of the five largest dairy markets in the world, is crucial for a global company like for Lactalis Group".
Is this finding that led the French group to offer also for assets of BRF. In addition to seek to ensure ownership of Parmalat, the brand for Lactalis wants, experts believe, prevent another great player between-or advance in the Brazilian market, which would increase competition in the segment.
On the market, it is estimated that the dairy area of BRF was being negotiated for up to $ 1.5 billion. The Division, which recorded net revenue of r $ 2.8 billion last year, sells chilled dairy products and milk long life with the Batavo brand and Elect.
According to industry sources, the for Lactalis would have done proposed by the Division. Danone's bid already contemplate only the refrigerated area. Searched for Lactalis, the Brazil's didn't come forward until the closure of this edition. Danone is not expressed to be in quiet period. The Saputo informed, through its communication Advisory, that "no comments on rumors". Lala did not respond to the email sent by report. The BRF said it would comment "market speculation".
A person familiar with the negotiations says that with the offers for assets in Brazil, for Lactalis and Danone entered into a race for second place on the world market for dairy products, under the billing criterion.
The Dutch Bank Rabobank on the largest of the Global Dairy segment Top-20, which takes into account the billing companies, dairy shows that Nestlé Switzerland retained the top spot with revenues of $ 28.3 billion in 2013. The French Danone and for Lactalis came next, with revenue of $ 20.2 billion and $ 19.4 billion, respectively. Both also kept their positions compared to the previous year in the ranking that contained the same names 20 12 months earlier (see table).
Marcelo Pereira de Carvalho, an analyst at Milkpoint consulting notes that the size of the Brazilian market is one of the biggest attractions for global dairy companies. "It's a big market, which grew a lot in the last few years," he adds. Between the year 2000 and 2013, the advancement of the per capita consumption of dairy products was 50 pounds, for estimated 170 pounds per capita, according to the Milkpoint.
"If we consider that the income will keep growing, consumer spending should continue to advance, albeit at a lower pace," says the analyst. The consumption in other countries shows that there is potential for increase in Brazil. In Argentina, for example, is 216 pounds, in France, of 219, and in the United States, of 257 pounds per capita a year, according to Milkpoint calculations.
He remembers that the leading companies in the sector are in Europe, a market already ripe, which grows little. "To grow, these companies have to go to emerging countries like Brazil". The country ends up being a potential target due to the greater cultural proximity to Europe if compared to other emerging markets.
Carvalho sets forth another factor of attraction: the perception that there's room to increase milk production in Brazil with an increase of productivity on farms. According to data of IBGE, inspected production of milk in 2013 in Brazil amounted to 23.55 billion liters, an advance of 5.5% a year. (Collaborated LHM, São Paulo)