FRANCE – Lactalis, the world’s largest dairy company, has fully exited the Argentinian market with sale of its factory to a local cheese operator.

According to a Lactalis spokeswoman said the factory manufactures cheese for the B2B market and was part of an acquisition made in Mexico.

Following the exit, the French giant said it would continue to export to the country. Exports would probably be made through its extensive network of facilities in Latin America.

That network was particularly boosted in December last year when the company moved to buy the joint-venture assets in Brazil owned by Fonterra and Nestlé.

Lactalis struck a deal for Dairy Partners Americas (DPA) for BRL700m (then US$131.5m) where Fonterra held a 51% stake in the venture, set up in 2003, and Nestlé controlled the remaining 49%.

Lactalis exist at a time when the competitiveness of the Argentine dairy industry continues to be affected by chronic political, economic, and institutional instability in the country, according to the US Foreign Agricultural Service.

According to the Observatorio de la Cadena Lactea (OCLA – Dairy Supply Chain Observer) data, the domestic market is the destination for 74.7% of the national milk production and the rest, 25.3%, to exports.

Of what is destined for domestic consumption, most is marketed through the retail channel (96%), while the rest is sold to industrial buyers and is marketed through industrial and institutional channels (2% each).

Though GDP growth has resumed after three years of recession, fluid milk consumption is now projected to drop sharply as the buying power of ordinary Argentines erodes through lack of income due to job losses, exhaustion of savings, and high inflation decreasing their purchasing power.

To further complicate matters, official government figures showed annual inflation in Argentina had hit 102.5% in February, meaning the price of many consumer goods has more than doubled since February 2022.

It is the first time it has passed 100% since the days of hyperinflation in the early 1990s and a clear indication of the difficult economic situation that most consumers find themselves in.

Lactalis’s Argentinian operations are very little compared to the rest of the corporation and an exit at this time would be the most ecomical decision given the dwindling fortunes of the country’s dairy industry

For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel