Dutch group, Denkavit, has announced that it has acquired the US subsidiary of Canadian company, Grober.
The US is one of the largest milk-producing countries in the world with great market potential, said the Dutch player.
Denkavit is a family owned company that specializes in young animal nutrition and feed ingredients, with a special focus on feed for calves, piglets, lambs and goat kids. It has had a research alliance with Grober for 30 years. “It was a partnership whereby we exchanged expertise, R&D knowledge only,” said commercial director of Denkavit, Henk Botter.
He told us about the rationale then for the acquisition of Grober Nutrition LLC, which has a production facility in Auburn, New York.
“The US market is one that is not accessible from Europe, you have import duties to pay if you want to import milk replacers into the US market. We have been analyzing that market for a couple of years now, and we concluded that if we were to have a position in the US market, we would need to have a production unit there.”
The sale of the New York business was a strategic decision for parent company, Grober; it wants to focus on investing, elevating and expanding its young animal nutrition business in Canada.
The deal is in line with Denkavit’s goal to become a global leader in calf milk replacer supply in all major dairy producing countries, said Botter. In that context, the company, which has annual turnover of €650m and 500+ employees, has been expanding in recent months.
“We established Denkavit Iberica in the Spanish market at the beginning of the year [February 2019] with our partner, Dinuvet. A few weeks ago, we bought the remaining shares of the Italian company, Frabes SpA; we were already the majority shareholder in that company, which produces milk replacer and whey protein concentrate (WPC).
“Besides that, we have set up partnerships with feed producers in big markets, in China for example, to improve our position.”
The Dutch group will continue to keep an eye out for further acquisition opportunities, certainly ones that align with its strategic vision, he added.
Raw material supply
In terms of the pressing challenges for the calf milk replacer market today, security of raw material supplies is one of the main issues, said Botter.
“We have a big dairy industry in Europe, and in other regions, but the whey and other by-products being produced are [increasingly being targeted] at food and pharma and are less and less available for animal feed.”
Denkavit has taken steps to address that challenge, with the recent acquisitions supportive in that respect.
“Frabes has its own production of WPC, a strategic raw material for milk replacers, while our acquisition of Grober Nutrition LLC means we now have our own production unit supplying fat-filled whey powders, which is, for us, strategically also very important. We can ship product from the US factory to other parts of the world.”
Piglet nutrition is also a big part of the Denkavit business, and that segment is performing very well, he said.
The Dutch company focuses on piglet milk replacers, pre-starters, weaner diets and weaner diet concentrates. “There is a great synergistic effect between [that business and] our calf milk replacer activities because, in the diet of the young piglet, you need a lot of dairy components and highly digestible fats.”
Denkavit’s piglet business has suffered from lower sales in Asian and China due to the outbreak of African Swine Fever (ASF) but sales to European countries like Germany, the Netherlands, France and Belgium, are compensating for that shortfall.
European farmers are seeing increasingly higher prices for their pigs in the past months, he noted.