Sector News

Emmi continues spending spree with 40% buy of Brazilian dairy

April 28, 2017
Food & Drink

Swiss milk processor and dairy products company Emmi is strengthening its position in South America with the acquisition of a 40% stake in Brazil’s Laticínios Porto Alegre.

Based in Ponte Nova in the state of Minas Gerais, the company is among the five largest dairies in its main market of Minas Gerais in milk collection, with strong positions in the cheese, fresh cheese, UHT milk, butter and whey powder product categories.

As part of its international program of growth, Emmi says the deal in Brazil bolsters its presence in a location which has been on the company’s “watch list” for several years. It already has a long standing presence in the market as a leading exporter of cheese fondue and raw milk cheeses from Switzerland, but wants to build on that through organic growth as well as acquisitions.

The stake in Laticínios Porto Alegre Indústria e Comércio S/A not only strengthens Emmi’s position in South America, it creates a second strong local foothold alongside Chile. The remaining 60% holding in the company, which was founded in 1991, will be retained by brothers José Afonso and company CEO João Lúcio Barreto Carneiro who will help to drive forward the future development of the company together with Emmi.

“Laticínios Porto Alegre is a healthy company that has also done an excellent job in the recent years of economic difficulty. Its strong position provides Emmi the possibility of complementing its product portfolio with innovative product and marketing concepts, thereby creating additional opportunities in a market with a great deal of potential over the long term,” says Emmi’s CEO Urs Riedener.

Porto Alegre is well established with a modern production and distribution infrastructure. Over the past few years, it has developed extremely well, with growth rates that have outperformed the market. This was due in part to the excellent raw milk base of the company, which has been built up through successful cooperation with milk producers.

Last year the company generated sales of approximately BRL 500 million (around US$157 million) and employed 1,000 people. Its head office and one production facility are located in Ponte Nova, with another plant in Mutum. Both locations are just a few hundred kilometers from São Paulo and Rio de Janeiro. The company also recently purchased production infrastructure in Barbacena to focus on the manufacturing of fresh cheese products.

The product portfolio has for some time been changing from basic products towards more premium dairy specialities, an area in which the collaboration with Emmi will create further opportunities. Laticínios Porto Alegre is the fifth largest dairy in its main market of Minas Gerais, with strong positions in traditional natural cheese, mozzarella and requeijão (fresh cheese), UHT milk and butter. It also manufactures whey powder for the Brazilian Food Industry.

Brazil officially enter the Recession in 2014 and several years of economic difficulties have followed. However, some analysts says the country’s economy is now stabilizing as inflation has declined in recent months and the Brazilian Real is recovering.

Emmi considers Brazil as the most important dairy market in Latin America with more than 34 billion kg of milk produced which ranks it among the largest global milk producers.

“Emmi’s engagement offers a good opportunity to be present in this long-term attractive market,” adds the company.

In 2005, Emmi AG acquired Italian dairy Trentinalatte SpA, a group specializing in yogurt related food and drinks, in 2010, it acquired German dairy company Onken and in 2016, it acquired American cheese manufacturer Cowgirl Creamery.

And in January, Emmi signed a contract for the sale of Italian Fresh Foods SpA (IFF) in Lasnigo/Como, Italy. IFF produces and distributes high-quality dessert specialties. The acquisition also strengthens Emmi’s position in the Italian specialty market and in an attractive niche market.

Source: Food Ingredients First

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