Dino Dello Sbarba - Ontario Dairy Council
Transcription
Dino Dello Sbarba - Ontario Dairy Council
Priorities to grow the Canadian Dairy market ODC, Annual meeting, June 09 1 Company overview The Canadian Dairy Market Growth Priorities Priorities to grow the Canadian Dairy market 2 Saputo – Today $ 5,700 billion in sales 5 countries 48 plants 9,400 employees 3 Company History Acquired the Treasure Cave and Nauvoo blue cheese brands (USA) from ConAgra Foods for $36.5 million Entered the fluid milk market by acquiring Crémerie des Trois-Rivières (Québec) Acquired several manufacturing operations and developed its Canadian national distribution network 1954 1970 Founded in 1954 by Lino Saputo and his parents in Montreal (Québec, Canada) Acquired Stella Foods (USA), with $1 billion in sales, for $580 million On October 15, 1997, completed its IPO of 18.9 million shares at $4.25 (2001 and 2008 split adjusted) 1988 Entered the US dairy market by acquiring two cheese plants 1997 1999 Acquired Groupe Cayer-JCB, a fine cheese manufacturer (Québec), for $13.7 million 2000 Completed the private placement of US $250 million Senior Notes Acquired Culinar, a bakery company, for $283.5 million Acquired 100% of Molfino Hermanos S.A., the third largest dairy processor in Argentina, for about $60 million 2001 Acquired the fluid milk and cheese operations of Agrifoods International Co-operative Ltd. (Canada), with sales of $1.4 billion, for $407.3 million 2003 Acquired the activities of Alto Dairy Cooperative based in Acquired SpezialitätenWaupun Käserei De Lucia GmbH Wisconsin for (Germany) for $160 million. $7.1 million Acquired Boulangerie and Biscuit Rondeau (Québec) for $12.5 million 2005 2006 Acquired Fromage Côté and Distributions Kingsey (Québec) for $52.9 million Acquired Schneider Cheese (USA) for $32.9 million Acquired the activities of Neilson Dairy based in Ontario for $465 million 2007 2008 Acquired the activities of Dansco Dairy Products Limited (UK) for $12.2 million Acquisition of Land O’Lakes West Coast industrial cheese business (USA) for $254 million 4 Ownership and Management H Ownership Structure (As of March 31, 2008) Gestion Jolina 33,91% Others 66,09% H Operating Structure Saputo Inc. Dairy Products Division (Canada) Dairy Products Division (Argentina) Dairy Products Division (Europe) Dairy Products Division (USA) Bakery Division 5 Saputo - Canada Dairy Products Division (Canada) H 4,700 employees H 26 plants 6 Saputo - USA Dairy Products Division (USA) H 2,700 employees H 16 plants 7 Saputo - Argentina Dairy Products Division (Argentina) H 850 employees H 2 plants 8 Saputo - Europe Dairy Products Division (Europe) H 150 employees H 2 plants 9 Saputo - Bakery Bakery Division (Canada) H 1,000 employees H 2 plants 10 Procurement Over 6 billion litres, yearly Canada: Supply management USA: Market pricing. Milk sourced through long term contracts with COOP’s and independant farmers Argentina: Monthly negotiated pricing to reflect domestic and export market conditions. Milk sourced through own farms and independant farmers Europe: Market price. Milk sourced through independant farmers milk in UK and local milk brokers in Germany 11 The Canadian Dairy Market Priorities to grow the Canadian Dairy market 12 Canadian Dairy market Definition of the Canadian Dairy market The sum of activities where Dairy products are consumed (Retail, restaurants, further processing, export etc.) of which the Processing industry is a part and the Producing industry is a sub-part. Basic assumptions for growth Every industry player wants to grow. Market has to be profitable . Dairy is competing with other foods If PC consumption increase, some other food has to give up. 13 Canadian Dairy market Facts about growth Real growth can be achieved with existing products if: Increase in consumption per capita of within the market Increase in internal market size Increase through importing products (replacing existing products) Real growth can be achieved with new products if: Innovative Dairy based products, replacing other food. Not exclusively all Dairy based Individual growth does not guarantee real growth Growing through customer expansion Growing through new customer Growing through market share Growth in revenue is not market growth Selling less items at inflated price does not insure long term viability. 14 Canadian Dairy market Facts about the Canadian Dairy market Per capita consumption above average within developed countries at over 257 L/capita (avg. 100 L world) Dairy products are part of daily diet, perceived healthy, of high quality and safe Supply of raw material highly regulated, complex, not competitive with world pricing, mainly USA, our immediate neighbour in relation to eventual WTO agreements Protection on finished dairy product, and raw milk importations for now Very stable supply, has not grown in 30 years 15 Canadian Dairy market Facts about the Canadian Dairy market Processing highly concentrated • 3 processors average 5.0m L each…daily • 380 remaining plants average 6.4 ml/each…yearly • Processors are limited in their intake of milk • Retail market high concentration -60% of Dairy market • Store brands are increasing in share. Bulk dairy delivers low margin • Food Service market fragmented - 30% of Dairy market • Pizza cheese and Process are largest segments and not growing • Industrial processing stable to declining -10% of Dairy market • Imported finished products with dairy are growing 16 Canadian Dairy market Market Assessment The processing industry is growing in certain segments using approximately 1.5 BL milk equivalent or 20% of production Dynamic growth as a result of investment and innovation (yogurts, fine cheeses, specialty milk beverages…) Modest growth due to lifestyle (cream, organic, green) Modest growth in specialized dairy derivative exports The processing industry is stagnant to declining in others representing approximately 6.0 BL milk equivalent or 80% of production Basic core milk products, Cheddar and Mozzarella, Process, Butter, milk powders These products generate low to loss leader margins within the retail market 17 Growth Priorities Priorities to grow the Canadian Dairy market 18 Growth Priorities Under current SM producing industry Need for innovation and new products (20%) Need for competitive distribution of margin amongst players (80%) Under a modified SM producing industry Processing and Producing industry need to be competitive Remove cost out of the system (simplify procurement) Accept a fair premium cost for SM Government may need to support dairy farming Under an open system Processing and Producing industry need to be competitive Need access to foreign markets 19 Growth Priorities Under current SM producing industry Need for innovation and new products (20%) Need for competitive distribution of margin amongst players (80%) Research and development Flexibility in regulation Investment in targeted marketing Investment in Capital for new equipment May not necessary rely only on raw milk Make use of core dairy product competitive Simple, transparent, targeted, equitable 20 Growth Priorities Under a modified SM producing industry Processing and Producing industry need to be competitive Capital investment Specialization of processors Align efficient production and processing Remove cost out of the system (simplify procurement) Reduce generic advertising Direct contracts with farmers, coops Reduce infrastructure to manage milk Accept a fair premium cost for SM Mechanism to manage supply, surplus, etc. Government will need to support dairy farming Quota value, transition, decoupling as per other countries 21 Growth Priorities Under an open system Processing and Producing industry need to be competitive Capital investment Specialization of processors Align efficient production and processing Need access to foreign markets Influx of imports, mainly USA Extremely difficult transition for producing and processing industry Need to develop export expertise 22 Growth Priorities CHARLES DARWIN: DARWIN: "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change". 23