Emerging Markets and Whey Protein Hold the Key to Success, Says Lactalis

26 Jun 2015 --- Many people in the global dairy business will know Michel Nalet as President of the European Dairy Association, but as Communications Director at leading French dairy group Lactalis, Nalet has a tough task ahead to open doors of emerging markets. Nalet spoke to FoodIngredientsFirst at this week’s Global Dairy Congress, held in Amsterdam this week.

Lactalis, which is best-known for its President and Galbani cheeses, as well as, more recently, Parmalat, has its feet firmly on all continents, with combined sales of €3bn in 145 countries. It produces 100,000 tons of cheese globally and in recent years has made huge investment in emerging markets, with particular attention to Canada & Australia, following the acquisition of Parmalat in 2011.

However, with current economic and trade issues threatening the dairy industry, there is some more pressing work that needs to be carried out. “The extension of the import ban on European products into Russia is, of course, making a big impact,” said Nalet. “At a global level, the EU is not selling 260,000 tons of cheese and we’re part of this volume. Butter is also affected. We have built a strong relationship with Ukraine and this is an important market. Ukraine and Russia have good trade links in both directions which does affect us.”

“Some processors have had to transfer their volume of cheese to either other cheese or other products altogether. This is why we see more German and Dutch products today and this is the case throughout Europe, particularly in the old Balkan countries. There is tremendous price pressure and also some indirect problems,” explained Nalet.

When asked about the influx of milk and the impact of the lifting of milk quotas, Nalet explained that it is not just milk quotas that have affected the European milk surplus. “It is not just quotas, but also volumes of milk were very high since last year. Demand is slowing down, especially in Russia with no demand at all. We need to understand how to deal with the surplus,” said Nalet.

“There are huge opportunities in the dairy industry,” said Nalet. “Each big company in the dairy industry still only produces 2-3% of the global dairy output and this gives great opportunities for all dairy companies globally.”

Lactalis sees Brazil and India as particularly good for growth opportunities. “We have made even more acquisitions since 2014, particularly in the huge market of India. We need to investigate even more, but we already have seven production facilities.”

“Some 25 billion liters of milk are produced per annum in France alone. But production in India is very important now, as an emerging market, but also because it produces so much milk,” said Nalet. “We are looking for development in volume but also need our investment to be profitable for the future. It is very important as we enter new markets. The big challenge is to launch or relaunch new brands. But we’re confident for our position and that we will gain market share in the new countries.”

“There are some regions where we’re only just starting and some where we have more experience. Since we acquired Parmalat, we have become strong in Canada and Australia, mature countries, but nothing to do with developing countries such as India.” The company has made investment in new markets a priority and today it employs 72,000 people worldwide. Brazil also a big opportunity. Lactalis recently acquired another Parmalat franchise, which means it now has 18 processing factories in Brazil.

But what of new areas altogether? Nalet sees protein as the next big dairy money spinner. “We see growth in all protein products, particularly usage of whey ingredients. In the last 5 years we have really developed these products. We’re all working on it. There is also an opportunity to give more added value but that will take time to develop,” concluded Nalet.

By Kelly Worgan & Robin Wyers