Major Dairy Business Shake-Ups of 2024: Strategic Moves and Industry Implications
Source: The DairyNews
The first half of 2024 has seen significant organizational changes within some of the world's leading dairy companies. From Unilever's decision to spin off its ice cream division to Fonterra's strategic refocus on its ingredients and foodservice channels, these shake-ups reflect a broader trend of consolidation and realignment in the dairy sector. But what is driving these changes, and why is ice cream at the center of this activity?
Strategic Shifts in Dairy Giants
Unilever’s Ice Cream Division Spin-Off
In March 2024, Unilever, the global consumer goods giant, announced plans to spin off its entire ice cream division, which includes iconic brands such as Magnum and Ben & Jerry’s. This strategic move, expected to be completed by 2025, is part of Unilever’s broader plan to focus on its four high-growth divisions: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition. The spin-off is anticipated to result in approximately 7,500 job losses as the company reallocates resources to its core areas.
Unilever’s CEO, Hein Schumacher, explained that divesting the ice cream division would allow the company to concentrate on scalable brands and innovation within complementary operating models. The decision is seen as a way to streamline operations and enhance growth potential in areas where Unilever can maintain a competitive edge.
Milcobel’s Sale of YSCO
Belgian dairy co-operative Milcobel has also made headlines with its decision to sell its private-label ice cream division, YSCO. The sale is driven by the need to fund additional capacity and optimize processes within the co-op, particularly in a "fast-growing but highly fragmented market." YSCO, a significant player in the European private-label ice cream market, produces nearly 200 million liters of ice cream annually. The divestment is expected to have a positive impact on milk prices for Milcobel's members, signaling a strategic focus on core dairy operations.
Fonterra’s Divestment of Consumer and Integrated Businesses
In May 2024, New Zealand’s Fonterra announced its intention to divest from its global consumer and integrated businesses, including well-known brands like Anchor, Fernleaf, and Western Star. Fonterra’s CEO, Miles Hurrell, emphasized that while these businesses are strong, they are not essential to the co-op’s primary function of collecting, processing, and selling milk. The decision aligns with Fonterra’s strategy to prioritize its high-performing ingredients and foodservice channels, which are deemed more critical to its long-term success.
This move follows years of consolidation by Fonterra, including the sale of its Chilean dairy business, the divestment of its Chinese dairy farms, and the exit from Dairy Partners America Brazil, a joint venture with Nestlé now controlled by Lactalis Brasil.
The dairy industry shake-ups of 2024 underscore a broader trend of strategic realignment among global dairy majors. Whether driven by the need to streamline operations, focus on core competencies, or respond to market volatility, these changes reflect the dynamic nature of the industry. As companies like Unilever, Milcobel, and Fonterra continue to evolve, the impact of these decisions will shape the future of the dairy sector, influencing everything from product innovation to market positioning.
Unilever’s Ice Cream Division Spin-Off
In March 2024, Unilever, the global consumer goods giant, announced plans to spin off its entire ice cream division, which includes iconic brands such as Magnum and Ben & Jerry’s. This strategic move, expected to be completed by 2025, is part of Unilever’s broader plan to focus on its four high-growth divisions: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition. The spin-off is anticipated to result in approximately 7,500 job losses as the company reallocates resources to its core areas.
Unilever’s CEO, Hein Schumacher, explained that divesting the ice cream division would allow the company to concentrate on scalable brands and innovation within complementary operating models. The decision is seen as a way to streamline operations and enhance growth potential in areas where Unilever can maintain a competitive edge.
Milcobel’s Sale of YSCO
Belgian dairy co-operative Milcobel has also made headlines with its decision to sell its private-label ice cream division, YSCO. The sale is driven by the need to fund additional capacity and optimize processes within the co-op, particularly in a "fast-growing but highly fragmented market." YSCO, a significant player in the European private-label ice cream market, produces nearly 200 million liters of ice cream annually. The divestment is expected to have a positive impact on milk prices for Milcobel's members, signaling a strategic focus on core dairy operations.
Fonterra’s Divestment of Consumer and Integrated Businesses
In May 2024, New Zealand’s Fonterra announced its intention to divest from its global consumer and integrated businesses, including well-known brands like Anchor, Fernleaf, and Western Star. Fonterra’s CEO, Miles Hurrell, emphasized that while these businesses are strong, they are not essential to the co-op’s primary function of collecting, processing, and selling milk. The decision aligns with Fonterra’s strategy to prioritize its high-performing ingredients and foodservice channels, which are deemed more critical to its long-term success.
This move follows years of consolidation by Fonterra, including the sale of its Chilean dairy business, the divestment of its Chinese dairy farms, and the exit from Dairy Partners America Brazil, a joint venture with Nestlé now controlled by Lactalis Brasil.
The dairy industry shake-ups of 2024 underscore a broader trend of strategic realignment among global dairy majors. Whether driven by the need to streamline operations, focus on core competencies, or respond to market volatility, these changes reflect the dynamic nature of the industry. As companies like Unilever, Milcobel, and Fonterra continue to evolve, the impact of these decisions will shape the future of the dairy sector, influencing everything from product innovation to market positioning.
