The world’s second largest dairy group has inked an agreement to acquire one of Ukraine’s leading dairy producers
The world’s second largest dairy group inked an agreement in late October to acquire one of Ukraine’s leading dairy producers, Molochniy Dom (Fanni brand), for an undisclosed amount and stake.
The acquisition marks French Lactalis Group’s third Ukrainian purchase and a continued wave of international conglomerates absorbing local firms.
This flurry of purchases is prevalent in Ukraine’s fastest-growing sectors, including banking, metal production, and fast-moving consumer goods, among others.
“It is important to obtain a critical size of the Ukrainian market and we will have a better geographic coverage within the Fanni network,” Lactalis External Communications Director Luc Morelon said.
“Ukraine is a country with good potential for fresh dairy products and Fanni is a well-known brand.”
Lactalis Group, whose annual sales totaled almost $11 billion in 2006, will add 1 percent to its global sales with the acquisition of Molochniy Dom.
The Ukrainian producer, based in Pavlohrad in Dnipropetrovsk Region, boasts about $50 million in annual sales and produces 35,000 tons of dairy products a year.
The acquisition will allow Lactalis to become one of the top three dairy producers in Ukraine, according to the company’s press release.
Lactalis Group has been in the Ukrainian market since 1996 and produces more than 60,000 tons of products a year domestically, with annual sales of $100 million.
The latest acquisition is the third asset the company bought in Ukraine.
At the beginning of 2004, Lactalis Group acquired the Uman-based company Bilosvit, owner of the Lactonia and Bilosvit trademarks.
In 1998, the French producer bought the Mykolayiv dairy plant, where Lactalis started making products under the President brand.
Ukraine is a competitive field for many Western and Russian companies that dominate the Ukrainian dairy market and are buying up production assets in the country.
Last fall, another French giant, Groupe Danone, purchased a dairy plant in southern Ukraine to launch local production of its well-known dairy products.
In the spring of this year, France’s Bel Group bought the Shostka City Milk Plant to produce high-quality cheeses for domestic consumption in Ukraine and for export to neighboring countries.
Years ago, Russia’s Wimm Bill Dann purchased a major stake in a Kyiv dairy plant.
The strategies of big multinationals have been generally aimed at launching local production in Ukraine to decrease their fixed costs and increase profit margins.
The expansion of Lactalis Group into Ukraine falls in line with the group’s long-term strategy of expanding into new markets with high growth rates.
The group currently has factories in Moldova, Poland and the Czech Republic.
Lactalis Group operates a total of 124 plants, 46 of which are located outside France, earning it $5.7 billion in 2005.
