July 20, 2017

New York-based food and agriculture investment firm Arlon Group has acquired a stake in CBL Alimentos SA (Betânia) – the largest dairy company in the northeast region of Brazil.  

Under the terms of the deal, Bruno Martins Silva, principal with Arlon Group, will join the company’s board.

Backed by founding investor Continental Grain Company, and Rabobank, Arlon has $1.5 billion in assets under management and invests in middle market businesses throughout the entire food value chain.

“Arlon sets itself apart from other private equity firms,” said Bruno Girão, Betânia’s CEO and majority shareholder, who will continue to lead the business. “I appreciate the breadth and depth of Arlon’s excellent network in the food and agriculture industries in Brazil and globally. Their relationships and resources in retail, distribution and milk production will consolidate Betânia as the leading brand in the Northeast Region.”

Booming Brazil

Brazil’s dairy industry has seen compounded annual growth of 5 percent in the last five years, and is expected to climb from its current value of $22.1 billion to  a value of US$25.2 billion by 2021, according to Euromonitor.

Meanwhile, the yogurt and sour milk categories are forecast to see compounded annual growth of 2 percent, reaching a value of US$5.59 billion by 2021.

Numbers such as these, combined with industry experts expecting that Brazil’s dairy sector will see a recovery in 2017, along with stagnant growth in developed markets, has drawn the attention of investors and multi-nationals to the space.

In March of this year, PepsiCo was reported to have bid US$1.9 billion for Brazilian dairy company Fábrica de Produtos Alimentícios Vigor SA (Vigor), which operates seven manufacturing sites in four Brazilian states.

Meanwhile, two years before in December 2015, Coca-Cola’s Brazilian partner, Leão Alimentos e Bebidas, agreed to acquire Brazil’s Laticínios Verde Campo for an undisclosed sum.

Additionally, New Zealand dairy giant Fonterra also expanded into Brazil earlier this year with the announcement that it was investing US$175 million to build a new plant that once finished, will be the largest producer of natural mozzarella cheese in the Southern Hemisphere.

Despite the economic setbacks and challenges Brazil has experienced in recent years, the country’s dairy sector remains a promising bet for investors as recovery is anticipated.

“Betânia is well positioned in the growing milk industry as the leading regional dairy company,” said Silva. “We are very excited to partner with Bruno Girão, who built and led the impressive growth and professionalization of the company. Betânia has developed a value-added portfolio, good brand recognition and a strong supply chain. Bruno is a talented CEO who has significant experience in the industry, besides being a great partner. We are looking forward to supporting Bruno and the company, as it builds on its success.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.