Lactalis enters milk supply contract with Cativa

Lactalis enters milk supply contract with Cativa

French dairy major Lactalis has acquired assets in Brazil belonging to Cativa and has also signed a long-term milk supply contract with the cooperative.

Lactalis will purchase Cativa's processing and warehouse facilities in Cerqueira César in the state of São Paulo, and those located in Londrina and Pato Branco, both situated in Paraná state.   

It has also entered a ten-year milk supply agreement with Cativa, with an option to extend the contract for a further decade, and which forms a partnership where the companies will work together to develop the regional milk industry. No financial terms were revealed for either of the initiatives.

Cativa president Paulo Cesar Maciel said: "The cooperative will focus on the relationship with the producers, on improving the quality of milk and on the development of the collection, benefiting from Lactalis' know-how in the dairy area, a solid and reliable company with whom we build a relationship of trust that we want to maintain over time."

The new deal in Brazil for Lactalis, which produces milk, cream, butter, cheese, and dairy ingredients under brands such as Parmalat, Galbani and Président, builds on its purchase of the country's dairy company Itambé Alimentos. That transaction was finally completed in 2019 after drawn out legal proceedings dating back to 2017 with Grupo Lala in Mexico, which claimed the deal infringed on a former shareholder agreement.

Until September 2017, Itambé was co-owned by the Cooperative Central dos Produtores Rurais de Minas Gerais (CCPR) and Brazilian dairy business Vigor Alimentos. However, that month, Vigor was sold to Lala and CCPR exercised an option to buy its co-investor's shares in Itambé. Lactalis' purchase was then conducted through CCPR. 

Lactalis said the partnership with Cativa gives the company access to Paraná, the second-largest milk producing state in Brazil after Minas Gerais, where it gained a presence through the CCPR deal.

Patrick Sauvageot, president of Lactalis' operations in Latin America, added: "With this win-win partnership, Lactalis benefits from the cooperative's experience and trust with its 4,000 producers, to whom we bring our industrial knowledge and the prospect of developing their production." 

Lactalis do Brasil, the French group's local arm, registered a turnover last year of BRL9.8bn (US$1.7bn) after processing milk volumes of 2.7 billion litres.

Cativa, meanwhile, posted a turnover of BRL1.1bn and volumes of 360m litres. The co-op manufactures a range of dairy products, including fresh and UHT milk, powdered milk, flavoured milk drinks, yogurt, butter and cheese.