While you might think of milk and milk related products as just a small part of your life, they are actually part of an integral and huge industry in the world, which in a few years is expected to be worth over $587 billion. Yes, the dairy industry alone is worth more than half a trillion dollars.
You’re looking at the milk in your fridge in a different manner now aren’t you?
Milk alone is said to be one of the most produced and valuable agricultural commodities across the globe. Milk has resulted in an addition to the global value of livestock by 27% and an increase in value to agriculture by 10%. The best thing about milk is, it isn’t unique to a geographical location or culture; it is produced and consumed across the world, and is enjoyed by everyone, from little children to adults. In fact, in most countries, it ranks among the top five agricultural commodities, showcasing the importance and acceptance of milk across the world. While many animals are capable of producing milk, nearly 90% of the entire milk supply comes from cows, followed by buffaloes, goats, sheep and camels. At a global agricultural level, milk alone accounts for 14% of the total agricultural trade. Because of their value, dairy animals are present in at least 25% of the nearly 600 million farms across the world, and in industrialized economies, large herds of the same are kept, such as in the UK or the US. To take a look at the countries where the most dairy products are consumed, head on over to the 12 countries with highest dairy consumption and low osteoporosis rates.
Despite the importance of the dairy industry, prices of dairy products fell significantly over the second half of 2019, though they rebounded back in 2019, with skim milk powder pricing recording the highest increase. This is as more and more people across the world become health conscious and are very careful about what they put in their body. This may also be the reason why butter prices declined in 2019 as well, even though cheese prices increased. Global milk production also increased, with Asian countries leading the charge, though this was slightly offset by Oceanian countries.
Overall, dairy exports also increased in 2019, though by only 1% when compared with 2018, as exports were increased to 76.7 million tonnes. While you may think that the dairy industry is one of the least controversial industries in the world (after all, how bad could the guys producing milk be), but you would be completely wrong. The dairy industry has their own lobby in the National Dairy Council, which in the US represents tens of thousands of dairy farmers. Now you might have heard about lactose intolerance but if you’re white you may not know that it is not a one off, but around 75% of African Americans and 90% of Asian Americans are affected by the same. This means that the vast majority of non white people cannot even consume milk and yet we have laws in the US which mandate that a school lunch needs to include milk. While there is no doubt that milk is beneficial for you, for those who are lactose intolerant, that simply isn’t an option and there are much better substitutes as well. However, since 8% of the sales are made in this manner, the dairy industry keeps on lobbying the government to ensure that the rules do not change. While you might find this hard to believe, considering we’ve all grown up on charts with show milk as one of the most important part of our daily means, this is simply to ensure that the dairy industry does not lose out on sales.
The Covid-19 pandemic, which has resulted in the loss of over a million lives and infected over 50 million people across the world, saw billions going into lockdowns and businesses suspended. The dairy industry has also faced the same issue, especially as travel bans decimated the global supply chain. However, it it a very integral industry and even in such times, has to operate. After all, the dairy industry provides around 10% of the world’s protein, and there are estimated to be a billion livelihoods linked to the dairy industry, which also has one of the highest percentage of women in any industry across the world, especially in rural areas. Further since many end consumers of the dairy industry, such as schools and restaurants have been closed for months, there is little demand for dairy product, which could spell doom for many dairy farmers. However, there is a positive aspect to this as experts believe that the dairy industry will become more efficient and improved after Covid-19; however, there is no certainty when the pandemic will end and normal operations resume.
The USA, India, China, Pakistan and Brazil are the biggest dairy producers in the world, with India being the largest producer. India alone is responsible for 22% of the global output. South Asia has become one of the leading producers of milk, with production consistently increasing year on year, while as mentioned earlier, Oceania has seen a drop in the production. To rank the largest dairy companies in the world, we considered their dairy related revenues in both 2019 and 2018, assigning 70% weightage to the revenue earned in 2019 since it is the latest and most important benchmark to continue. So let’s take a look at the companies which have ensured the steady supply of one of the most important agricultural products in the world, starting with number 15:
Total sales in 2019 (in billions of dollars) 5.6
There are a lot of European countries in this list, so it makes sense that we start of in France with Savencia, which has nearly 20,000 employees and is a listed company. The company is famous for producing cheese, and hence shows that specializing well in anything can earn you billions of dollars if you do it right. It was initially known as Bongrain, before being renamed to Savencia in 2015.
Total sales in 2019 (in billions of dollars) 5.7
Another French company makes out list with Sodiaal, which out earns even Savencia. Sodiaal has many brands which are quite famous across the world, including Candia, Regilait, Entremont and Yoplait. The raw material for these brands is provided by 17,000 different producers in France. The company was founded in 1964 and according to its website, was created to cater to the changing tastes of the consumers in France at the time.
Total sales in 2019 (in billions of dollars) 5.9
Meiji Dairies Corporation is a Japanese company, and one of the biggest confectionary and dairy companies in the world and sells various dairy items such as ice cream, cheese and milk. It also sells items other than dairy such as drinks and pizza.
12. Unilever (NYSE:UN)
Total sales in 2019 (in billions of dollars) 6.4
Unilever is one of the most famous and most recognized companies in the world, with over 400 globally recognized and beloved brands in a variety of industries. Unilever operates in over 190 countries and has more than 300,000 employees across the world, and has a really strong presence in the dairy industry as well. Of a total revenue exceeding $50 billion, $6.4 billion are derived from the dairy industry, a big part of which comes from its acquisition of TINE Danish Dairy Unit.
11. DMK Group
Total sales in 2019 (in billions of dollars) 6.5
DMK Group has over 7,700 employees across 20 locations in Germany and is involved in various dairy products such as ice cream, cheese and fresh dairy products. The company was formed in 2011 when two of Germany’s major dairy companies merged, and the company has not looked back since.
10. Saputo (TSX:SAP)
Total sales in 2019 (in billions of dollars) 11.3
The biggest dairy companies in the world are spread across various countries, and we now move on to Canada for Saputo, and now has over $11 billion in annual sales. The company also has nearly 17,000 employees and operates in Canada, UK, US, Argentina and Australia.
9. Arla Foods
Total sales in 2019 (in billions of dollars) 11.8
Arla Foods takes us back to Europe, and Denmark in particular, where it is headquartered in Viby. A common theme you may have noticed is companies merging to become giant and the same is true for Arla Foods, which was formed in 2000 after Arla and MD Foods merged together.
8. Mengniu (SEHK:2319)
Total sales in 2019 (in billions of dollars) 11.9
We now have a Chinese company amount the largest dairy companies in the world, where the largest shareholder is the state. The company was founded in 1995, 25 years ago. The company primarily sells ice cream and other dairy products.
7. Friesland Campina
Total sales in 2019 (in billions of dollars) 12.6
Friesland Campina is a Dutch company with branches in 33 companies and nearly 22,000 employees. The company itself was founded recently in 2008 after the merger of Friesland Foods and Campina. It purchased a 51% stake in Engro Foods Pakistan for $450 million in 2016, thus growing siginificantly.
6. Fonterra (NZX:FCG)
Total sales in 2019 (in billions of dollars) 13.2
We told you that the largest dairy companies belong to various countries across the world and Fonterra is located in New Zealand, and is unique in the fact that it is actually owned by 10,500 farmers. The company was established in 2001 after, and you probably know what’s coming, the two biggest dairy companies in the country merged together. It is actually New Zealand’s largest company.
5. Yili (SSE:600887)
Total sales in 2019 (in billions of dollars) 13.4
Yili is the largest dairy company in China, and engages in the processing and manufacturing of milk, as well as ice cream, milk tea powder, fresh milk and sterilized milk, and has its head office located in Hohhot. The company was founded in 1993 and was an official sponsor of the 2008 Beijing Olympics.
4. Danone (Euronext Paris: BN)
Total sales in 2019 (in billions of dollars) 18.2
Danone is also one of the largest beverage companies in the world, and features in this list as well. This European multinational company is headquartered in Paris and and currently sells its products in over 120 countries across the world.
3. Dairy Farmers of America
Total sales in 2019 (in billions of dollars) 20.1
The Dairy Farmers of America is a cooperative founded in 1998 and was the main architect behind the earlier story of milk being mandated in school lunches, and seems to have done really well for itself, with over $20 billion in Revenue.
Total sales in 2019 (in billions of dollars) 21
France has had the most entries in this list and Lactalis is the biggest dairy company in the country, and was formerly known as Besnier.
Total sales in 2019 (in billions of dollars) 22.1
Topping the list of the 5 largest dairy companies in the world is of course, Nestle. Nestle is one of the biggest companies in the world and this Swiss giant seems to have a hand in a lot of our favorite brands and is said to be one of the 11 companies that have a hand in almost all of the brands which are famous globally.
While Nestle seems to be among the most famous companies in the world, it is also by far one of the most controversial. There are dozens of allegations and lawsuits against the company, alleging the worst crimes you can think of, and while these may just be accusations, it does seem that they’re quite convincing. While the company operates in 189 countries across the world and has nearly 300,000 employees, it also attracts criticism in almost all of these countries thanks to its unethical activities such as controversial marketing in developing countries which would discourage mothers from breastfeeding their children and rely on Nestle formula instead, slavery and child labor accusations in Africa, anti-union in Colombia, controversial water bottling operations in Oregon, Michigan and California, price fixing of chocolates and demanding Ethiopia repay a debt of $6 million while it was undergoing a severe famine. Nestle may be one of the biggest companies in the world but it has to do a lot more to not be categorized as one of the most unethical companies in the world.