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Dive Briefing:
- General Mills is selling its North American yogurt business to French dairy companies Lactalis and Sodiaal in a cash deal valued at $2.1 billion. Lactalis will acquire the U.S. business, while Sodiaal will acquire the Canadian business. The deal is expected to close in 2025.
- The sale includes the U.S. and Canadian operations of several yogurt brands, including Yoplait, Liberté, Go-Gurt and Oui, as well as manufacturing facilities in Tennessee, Michigan and Quebec.
- The sale will allow General Mills to focus its portfolio on fast-growing categories such as snacks and pet food while exiting its yogurt business, which faces competition from companies such as Chobani and Danone. The North American yogurt business contributed about $1.5 billion to General Mills’ fiscal 2024 net sales.
Dive Insight:
When General Mills acquired a controlling stake in Yoplait a decade ago, the brand was the world’s second-largest yogurt brand. Since then, several varieties of yogurt have entered the market, diluting Yoplait’s sales and potential. Greek varieties, led by Chobani, have entered the yogurt market, while other varieties, such as Icelandic Skyr and plant-based, have given consumers more choices.
Meanwhile, according to Statista data, U.S. yogurt sales have been flat, hovering around $7 billion over the past decade. Not a recipe for success for a company like General Mills looking to grow its operations. The company has reportedly been looking to sell its North American yogurt business for some time.
“Today’s announcement represents another important step forward as we advance General Mills’ Accelerate strategy and realize our ambition to reshape our portfolio,” General Mills CEO Jeff Harmening said in a statement.
Harmening noted that General Mills has “sold” about 30% of its net sales since fiscal 2018. The biggest move came when it entered the pet food business that year with its $8 billion acquisition of Blue Buffalo. General Mills has since added other pet food products and frozen pizza crust maker TNT Crust.
“By efficiently managing our portfolio and focusing on our global platforms and local jewellery brands with stronger growth prospects and more attractive margins, we will be better positioned to generate top-tier shareholder returns over the long term,” he said.
General Mills plans to use the proceeds from the deal to buy back its own stock.
For Lactalis, the acquisition further expands its efforts to build a deeper presence in the U.S. dairy market. Lactalis North America, a division of the 90-year-old French dairy company, had a small presence in the U.S. until 2017, primarily through its popular shelf-stable milk brands Parmalat and President.
But seven years ago, Lactalis acquired Stonyfield from Danone for $875 million, solidifying its position in the organic space. Lactalis followed suit by adding Siggi’s in 2018., A New York-based company that makes Icelandic yogurt using simple ingredients. The company doubled its U.S. presence a few years later after acquiring Breakstone’s and Knudsen’s brands from Kraft Heinz for $3.2 billion.
The acquisition of Yoplait will enable Lactalis to increase its scale in the dairy market, strengthen its negotiating power with retailers, and expand its portfolio of products available to consumers.
“These iconic brands are a strategic fit for Lactalis, helping us expand our consumer reach and become a leading dairy manufacturer in the United States,” said Emmanuel Besnier, “Lactalis’ CEO said in a statement:
By folding Yoplait into the dairy-focused Lactalis brand, the brand is likely to get more attention than it did when General Mills was competing with all of its Nature Valley bars, Betty Crocker cupcakes, Cherrios and Chex Mixes.
Lactalis could have taken a similar strategy with Yoplait as it did with Kraft Heinz’s natural cheese business.
After acquiring the business in 2021, the company spent months studying the brand to identify growth opportunities and unique innovations to bring to market. With a 90-year history, Lactalis also leveraged its R&D expertise in dairy to develop new products.
