The Ram's Horn

Ram's Horm Index | Virtual Library | Magazine Rack | Search

new2.gif (111 bytes) Join the Ecological  Solutions Roundtable new2.gif (111 bytes)





The dairy industry in Canada has recently been consolidated essentially into the hands of three companies: Parmalat of Italy, Agrifoods International of Vancouver, and Agropur of Quebec, the last two of which are, technically, producer-owned co-operatives. Nestl‚ has also emerged as a major player in ice cream (part of its global plan) and branded products.

The story can begin with the manufacturing and distribution agreement between

Ault Foods Ltd. and Nestl‚ Canada in 1994. Ault gained exclusive rights in Canada to Nestl‚ ice cream and ice cream novelty brands, including Laura Secord, and the manufacturing selling and distribution of Carnation Coffee-mate Liquid. Ault's sales in 1994 were $1.24 billion, yielding a profit of $24.6 million.

The next year Ault Foods bought the cheese business of Schneider Corp, boosting its share of the processed cheese market in Ontario and Quebec to 26%.

In 1996, Ault, now Canada's largest fully integrated dairy processor, with annual sales of about $1.3 billion, won a court injunction ordering Dairy Producers Co-operative Ltd. of Saskatchewan to honour a 1993 agreement to sell milk and dairy products under the Sealtest label. DPCL wanted to drop the agreement on the grounds that sales were not adequate to cover licensing costs. DPCL was subsequently taken over by Dairyworld Foods.

Dairyworld Foods was formed in July, 1992 with the merger ("statutory amalgamation") of three dairy co-operatives: Fraser Valley Milk Producers Co-operative (doing business as Dairyland Foods), Northern Alberta Dairy Pool (Nu-maid Dairies) and Central Alberta Dairy Pool (Alpha Milk Co.). In 1993 Dairyworld was restructured with Dufferin Employment Co-op Ltd (Manco) as the Manitoba operation of Dairyworld, with 3000 employees. In June, 1996, Dairy Producers Cooperative Ltd. (DPCL) of Saskatchewan was brought into the merger. After that, the company's name was changed to Agrifoods International. It has 2100 milk shippers in the three western-most provinces, and claims to be the largest dairy co-operative in Canada. Dairyworld's sales for 1996 were $1.13 billion, and the company processed a little over a billion litres of milk. Earlier this year (1997), Dairyworld sold its ice cream products group to Nestl‚ Canada, but continues to supply dairy ingredients.


In mid-1996 Ault Foods Ltd. and Nabisco Ltd. reached an agreement under which Nabisco margarine brands and technologies were licensed to Ault in Canada, adding Parkay to Ault's Lactantia brand. Ault also announced sales for year-end April 27, 1996, of $1.35 billion. Ault then sold its ice cream and frozen yogurt business to Nestl‚ Canada for $221 million. Nestl‚ Canada will also acquire Ault's Meadowgold and J. Higby trademarks and Sealtest Parlour and H„agen-Dazs licences.

The biggest change in Ault came when it sold its Ontario fluid milk operations to AgroPur Cooperative Agro Alimentaire of Quebec for $145 million last February (1997). Agropur has about 4600 members, each with one vote and a share in the company profits depending on the amount of milk they ship. AgroPur has 40% to 53% of the Quebec milk market and 10% of the Ontario market. It bought a Brantford, Ont, dairy plant in 1995 and a distribution centre in Toronto in 1996. Ontario farmers who supply AgroPur may want to be able to own shares, but this isn't possible because AgroPur is chartered only in Quebec.

With its purchase of Ault, AgroPur will have sales of about $1.4 billion and 30% of the Ontario milk market. In the deal, AgroPur also acquires Ault's manufacturing and national distribution operations for its Sealtest brand yogurt, cottage cheese and sour cream. Ault will continue its Quebec fluid milk operations where it has 30% of the market. AgroPur has about 53% of the market through its Natrel division.

All this still leaves Ault as the largest maker of butter in Canada, second in cheese (17%) behind Kraft and second in margarine after Unilever. Ault's revenues for fiscal 1997 will be about $992 million.


In March of this year, Beatrice, one of the other major dairy processors in Canada, was bought by Parmalat Finanziaria SpA, an Italian food and dairy company, for C$290 million plus $130 million in assumed debt. Parmalat, with global annual sales of $5.5 billion, has 80 plants in 20 countries, including Brazil, Argentina, Venezuela, the U.S., Hungary and Russia.

Then in May, the Saputo family of Montreal launched a $330 million bid for Ault Foods. Saputo Group Inc. is a $425 million-a-year cheese business which already owns 16.3% of Ault. (Mackenzie Financial Corp. owns 17.2%, Caisse de depot et placement du Qu‚bec 16%, and Sun Life Assurance 14.7%) The directors of Ault officially rejected the $28-a- share offer.

The next, and concluding, round went to Parmalat, which made a bid of $34 a share, or $415 million, for Ault. Ault's directors recommended that shareholders accept. The Saputo family then agreed to tender the Ault shares it had acquired to Parmalat. Ault also gave Parmalat an irrevocable option to buy its Quebec fluid milk business for $65 million.

By July 11, Parmalat had 97.7% of Ault, thanks to Saputo's tendering of their block, and the deal was done. The combination of Beatrice and Ault will make Parmalat Canada's largest dairy group with annual revenues in the range of $1.9 billion.

Parmalat has built its global business on long-life (UHT) milk, though it has not gone down well in the U.S. It would appear that Canadians will now be challenged to stomach milk engineered for long shelf-life, not taste or nutrition.

If they don't like it, there is not going to be a whole lot of choice in the marketplace, as the big food distributors are less and less interested in dealing with a number of smaller suppliers, preferring instead one big supplier to serve their entire chain from coast to coast. This is what, in part, has driven the consolidation of the dairy industry. Unfortunately, the milk marketing boards across the country have accepted this as inevitable and have cooperated in the elimination of small dairies producing high quality dairy products for a local or regional market.



Copyright 1997. Ram's Horn

Info Request | Services | Become EAP Member | Site Map

Give us your comments about the EAP site

Ecological Agriculture Projects, McGill University (Macdonald Campus)
Ste-Anne-de-Bellevue, QC,  H9X 3V9 Canada
Telephone:          (514)-398-7771
Fax:                     (514)-398-7621


To report problems or otherwise comment on the structure of this site, send mail to the Webmaster