Danone extended the spread of Western dairy groups into developing markets by paying $680m to gain control of Morocco’s top dairy group, Centrale Laitiere.
Danone, which has held a 29% stake in Centrale Laitiere since 2001, raised its ownership to 67% by buying shares from Societe Nationale d’Investissement, the Moroccan investment fund.
The French-based said that the deal, which values Centrale Laitiere’s equity at some 19.6bn dirham ($2.2bn), “represents a key step in Danone’s development in Morocco”, which, with a population of more than 30m, represents a substantial market.
Indeed, the deal will allow Danone “to invest more in a market with major potential”, the company said.
‘Strategic appeal’
It added that “the move also confirms the strategic appeal of markets in North Africa for Danone”.
Many Western dairy groups are seeking entries to developing country dairy markets, with this month alone seeking Netherlands-based FrieslandCampina wrap up a takeover of the Philippines’ Alaska Milk, while Arla unveiled an equity stake in Chinese giant Mengniu.
New Zealand’s Fonterra, the world’s biggest dairy exporter, has also unveiled a focus on emerging markets which will see it ramp up milk production in China.
Danone itself two years ago sealed a tie-up with Unimilk to beef up in the Russian dairy market, into which PepsiCo gained entry through thepurchase of Wimm-Bill-Dann six months later.
Morocco vs Algeria
Centrale Laitiere handles some 60% of the milk processed industrially in Morocco, although some 40% of milk is consumed through the informal market, according to estimates from the United Nations Food and Agriculture Organization.
Centrale Laitiere’s operations are based around five plants, which specialise in different products, such as pasteurised milk, yoghurt or cheese.
Morocco – unlike neighbouring Algeria, which has a similar-sized population – is not a major dairy importer, having imposed hefty tariffs which have encouraged the growth of domestic production, which has growth to some 1.5m tonnes from about 1m tonnes at the turn of the century.
Other foreign companies with a presence in the market include Switzerland’s Nestle, which processes some 7% of industrial dairy volumes, and is present mainly in higher-value segments such as ice cream.
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