Lactalis CEO Philippe Palazzi left the dairy giant on Feb. 3 over what the company indicated was a disagreement over strategy, the dairy giant said in a statement provided to Food Dive. Palazzi took over as chairman and CEO in June 2020, according to his LinkedIn page.
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Dive Brief:

  • The family-owned company behind Parmalat milk and Siggi’s yogurt said in a statement that “the conditions for alignment with the group’s strategy could not be met.” It did not offer any additional details behind Palazzi’s departure. Lactalis has not yet named a successor.
  • The shakeup at Lactalis is the latest C-suite shakeup to impact a large dairy CPG headquartered in France. Last year, Danone named a new CEO to lead the maker of Oikos yogurt and Evian bottled water.

Dive Insight:

While little is known behind Palazzi’s sudden departure, it’s apparent from the short statement that Lactalis and the seasoned executive determined pretty quickly that things weren’t working out.

It does not appear that financial missteps were responsible for the departure. Lactalis said in a statement that Palazzi’s investment and his energy “made it possible to achieve the financial objectives for the year 2021.”

More than likely he and billionaire Emmanuel Besnier, nicknamed the “King of Cheese” and the “Emperor of Milk” according to Bloomberg, couldn’t see eye to eye at Lactalis, one of the world’s largest dairy firms with an estimated $22.6 billion in sales. Besnier, the company’s president and primary shareholder, and his two siblings own all of Lactalis, the world’s largest maker of cheese, the wire service noted.

Besnier took over from his father at the age of 29, quickly ramping up the pace of dealmaking at the France-based company. Palazzi may have disagreed with the frequency of acquisitions by Lactalis and instead favored a less aggressive approach for the time being. Palazzi took over the business founded in 1933 after a lengthy career at German retailer Metro AG, where he eventually ascended to chief operating officer.

As Lactalis has grown its U.S. presence, it finds itself bumping up against companies such as Chobani, Danone and General Mills in yogurt, as well as brand name and private label offerings in cheese.

Until 2017, Lactalis North America, a division of the 89-year-old French dairy company, had a minimal presence in the states, mainly through its popular shelf-stable milk brand Parmalat and cheeses such as President. But five years ago, Lactalis purchased Stonyfield from Danone for $875 million, which gave it a strong foothold in organic. It followed that in 2018 with the addition of Siggi’sthe New York-based maker of Icelandic-style yogurts using simple ingredients.

Lactalis doubled down on its U.S. presence after it agreed to acquire Kraft Heinz’s natural cheese business for $3.2 billion in 2020. The U.S. Justice Department later required Lactalis to divest the Polly-O and Athenos brands in order to settle an antitrust case and allow the deal to go through. Once the deal was completed, Lactalis added products including Breakstone’s and Knudsen.

Lactalis is the latest European dairy company to have a leadership change at the top. Danone’s Emmanuel Faber left the company last year following pressure from activists agitating for a leadership shakeup after the maker of Silk yogurt and International Delight creamers struggled for years with a stagnant share price and pressure on many of its key businesses. He was replaced by former Barry Callebaut head Antoine de Saint-Affrique as CEO last September.

At the midpoint of the year, the all-milk price forecast for 2022 is a whopping $26.20 per hundredweight (cwt), according to the June 2022 USDA/ERS Livestock, Dairy and Poultry Outlook report.

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