Lactalis Faces Profit Challenges Amidst Private Label Pressure and Shifting Consumer Behavior
Source: The DairyNews
Lactalis, the world's largest dairy company, encountered profit headwinds in the past year due to increased pressure from private label products and shifting consumer preferences.
Despite a 4.3% increase in turnover to €29.5 billion ($31.4 billion) in 2023, Lactalis reported a "weak" performance in consolidated net profit, amounting to €428 million. While this represented an 11% increase from the previous year, it fell short of expectations, with profit standing at €384 million in fiscal 2022, marking a 14% year-on-year decline.
The company attributed these challenges to changing consumer buying patterns, resulting in decreased sales volumes and a growing preference for private label products over national brands, particularly in Europe. However, Lactalis noted that demand for its products remained resilient, thanks to their quality and affordability.
Despite the profit setback, Lactalis managed to increase its profit margin from 1.36% to 1.45% compared to 2022, driven by organic growth and a strengthened presence in North America.
Chairman Emmanuel Besnier emphasized the company's commitment to achieving profitable and responsible growth, despite inflationary pressures and unfavorable global market conditions. Lactalis intensified its efforts to innovate and offer high-quality dairy products at competitive prices, reflecting its dedication to consumer satisfaction and future sustainability.
In addition to operational challenges, Lactalis faced regulatory scrutiny and market disruptions in various regions. Despite these hurdles, the company continued its strategic expansion, including acquisitions in Canada and Portugal, while maintaining a focus on debt reduction and environmental sustainability.
Lactalis reaffirmed its position as a leader in the dairy industry, with France remaining its largest market, followed by the US, Canada, Italy, and Brazil. With a workforce of over 85,500 employees worldwide, Lactalis remains committed to navigating challenges and seizing opportunities for growth and innovation in the dynamic dairy market landscape.
The company attributed these challenges to changing consumer buying patterns, resulting in decreased sales volumes and a growing preference for private label products over national brands, particularly in Europe. However, Lactalis noted that demand for its products remained resilient, thanks to their quality and affordability.
Despite the profit setback, Lactalis managed to increase its profit margin from 1.36% to 1.45% compared to 2022, driven by organic growth and a strengthened presence in North America.
Chairman Emmanuel Besnier emphasized the company's commitment to achieving profitable and responsible growth, despite inflationary pressures and unfavorable global market conditions. Lactalis intensified its efforts to innovate and offer high-quality dairy products at competitive prices, reflecting its dedication to consumer satisfaction and future sustainability.
In addition to operational challenges, Lactalis faced regulatory scrutiny and market disruptions in various regions. Despite these hurdles, the company continued its strategic expansion, including acquisitions in Canada and Portugal, while maintaining a focus on debt reduction and environmental sustainability.
Lactalis reaffirmed its position as a leader in the dairy industry, with France remaining its largest market, followed by the US, Canada, Italy, and Brazil. With a workforce of over 85,500 employees worldwide, Lactalis remains committed to navigating challenges and seizing opportunities for growth and innovation in the dynamic dairy market landscape.
