Agriculture News — French Company Lactalis Buys Brazilian Dairy Joint Venture From Fonterra & Nestle

A sale of the Brazilian dairy joint venture, known as Dairy Partners Americas (DPA), has been confirmed in a report from Agriland on 6 November 2023 about “Fonterra and Nestlé complete sale of dairy joint venture in Brazil.”

According to the details of this deal, French dairy producer Lactalis will purchase the joint ownership stakes from Fronterra and Nestle for a total of €133 million.

This will give the French company a new market entry into the Brazilian dairy farming sector, which was a little controversial at first, since Brazil’s Administrative Council for Economic Defense (CADE) sought to block the deal over what it called “horitzontal competition” concerns in October.

This ultimately led Lactalis to offer of a licensing agreement with local Brazilian dairy suppliers under a merger control agreement to seek Brazilian authorities’ approval to get the deal done.

Fonterra and Nestle agreed to sell the DPA to Lactalis in December 2022. Fonterra is a co-operative located in New Zealand. They were pleased with the terms of this deal, due to changing market conditions for the dairy sector. Here’s what Fonterra Chief Executive Miles Hurrell said:

“DPA Brazil has reached maturity as an investment for us, and the sale allows us to prioritise our resources to the businesses that are core to our strategy.”

As for Nestle, this deal signifies the larger global market trends for the agriculture and food industries. Have a look at the story about some of Nestle’s international operations from Areas & Producers below.

Nestlé Shuts Down Operations In Response To China’s Demographic Trends

Nestlé will close its baby formula manufacturing facility in Askeaton, Ireland, due to declining demand from China for baby milk formula products.

According to the news report written by The Irish Times, Nestlé has already put in place a plan to shut down all operations at this facility by 2026, which includes a research and development (R&D) facility and around 542 jobs at stake.

Spokespeople on behalf of Nestlé said that the decision is based on “external trends”.

Those external trends are the result of China’s declining population growth and birthrates, but also due to global market trends and geopolitical shifts.

For instance, in a CNN report about the story, Nestlé provided some data about the demographic and market trends in China:

“The number of newborn babies in China has declined sharply from some 18 million per year in 2016 to fewer than 9 million projected in 2023. The market, which had previously been reliant on imported infant formula products, is also seeing rapid growth in locally produced products.”

In some concurrent news stories this week, Nestlé’s products in the India market illustrated these global market trends, as Nestle India reported a significant growth in sales and revenues during the Q3 earnings season. These results in the India markets were attributed to the company’s instant-coffee product, Nescafe.

But the global coffee market is highly vulnerable to climate change conditions, since the arabica coffee bean is linked to climate change impact on areas of Latin America, where Nestlé sources most its coffee beans.

According to a statement from the Inter-American Development Bank, areas of Latin America and the Caribbean, forming the coffee belt, are likely to see that “rising temperatures will reduce the area suitable for growing coffee by up to 50%” by 2050.

And that’s where we should begin discussing the global market trend. How will companies retain market share for coffee during these climate change conditions in the future?

For a further explanation, please have a look at the [Industry Talk Time] about what Nestlé is doing in response to global market trends.

The content in Areas & Producers provides a methodology for readers and writers who are curious about global trends and the future of the world.