A French industrial newspaper (“Process Alimentaire” of September 2012), published an analysis of the 5 year trend for the European dry milk industry. The report shows a potential for 20 major greenfield projects resulting in approximately 2 B€ CAPEX. Based on additional information, we could also see further projects added in the Netherlands and France at a minimum.
Interesting enough, most of the significant projects are due by the end of 2014 which aligns with the end of the milk production quotas from the European Union which have been in place since 1984.
However, the European dairy consummation trend is quite stable already, so where is all this new milk production going?
Most of the powdered milk will be imported toChina and addresses the change in food habit of the 350M middle class growing population. This is similar to the entire population of the USA.
Can we conclude that milk could be a potential new European “white gold”?
Key concerns for these projects are food safety, energy efficiency, carbon footprint and naturally… time to market. The first and most profitable greenfield project could control the market, with the other projects facing the risk of being dropped or even forced to close down quickly?
These large investments are quite interesting but raise some global questions:
– How can such investments be, at least, “carbon neutral” due to the transport from Europe toAsia?
– How can we secure these factories profitability on the long run knowing the cost of energy perspectives?
I’m very interested in your vision on this global subject and I welcome your feedback.