Once the unquestioned juggernaut in the American dairy case, the Kraft brand shed a lion’s share of its market position when it sold off its natural and specialty cheese businesses to the Lactalis Group in November. That sale also made the U.S. dairy sector a little less American as the Illinois-based company that invented American processed cheese in 1916 as a way to feed American soldiers transferred its ownership stake to a company based in France.
A major player in dairy processing for over a century, Kraft Foods held the pole position with $3.9 billion in U.S. dairy sales and $16 billion worldwide just 25 years ago. Those sales came from both the natural and processed cheese categories. By the turn of this century, cracks began to form in the company’s market position. Those fissures largely formed as the once mighty Kraft went through a number of business reorganizations that eventually caused its grocery division to split into North American and worldwide enterprises. By 2015, Kraft’s parent company merged with H.J. Heinz to form Kraft Heinz, and the focus began to shift further away from dairy.
As all this was taking place, the surging Lactalis Group made its play for the Kraft Heinz Company’s natural cheese business. Since 2010, Lactalis propelled itself from No. 9 in global dairy sales to the top of the list by consummating business deals on nearly 60 mergers and acquisitions. This past year, Lactalis overtook Nestle as the global dairy product sales leader.
The latest acquisition fortified the French-based company’s stake as the world’s largest dairy company, adding to its already impressive $23 billion in sales for 2020, according to Rabobank data published in its most recent Global Top 20 list. In that same list, Kraft Heinz stood No. 15 with $5.6 billion in dairy product sales.
While Lactalis propelled itself to be the world’s largest global dairy company, its North American market share ranked a meager No. 18 with $3.2 billion in sales, according to Dairy Foods’ 2021 Dairy 100 list. Given Kraft Heinz had $5.2 billion in sales that same year, Lactalis will vault up the U.S. rankings this coming year.
With one business deal, France now claims two of the top five dairy processing entities in the U.S. as Danone ranks No. 4 with its $6.2 billion in sales. While we can all applaud the recent investment in dairy processing, one also must throw up a flag of caution as international companies continue to gobble up domestic processing assets. U.S. co-ops and companies must reinvest in the market or our collective future may grow dimmer with each passing year.