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France: Is Yogurt A Strategic National Industry?

France: Is Yogurt A Strategic National Industry?

Foreign companies will be bidding for a major share of France's Yoplait, the world's second-largest yogurt maker. Is this good for Yoplait? Or for France?


A 50 percent stake in the French dairy product manufacturer Yoplait, the world's second largest yogurt maker, is up for grabs following French private equity group PAI's decision to cede its shares in the company. Potential bidders in the first round of bidding, which opened Friday, are expected to include French cheese makers Bel, but also Mexican Grupo Lala and Chinese Mengniu. Les Echos editor David Barroux looks at what it would mean if this quintessentially French brand, set up by French farmers in the 1960s, ended up in Mexican or Chinese hands.

As bids start to roll in for Yoplait, it is tempting to call on private equity group PAI to exercise some "economic patriotism" and only cede its stake to a French player. Combining Yoplait's trademark little flower with Bel's Laughing Cow or Lactalis' President Camembert brand would theoretically create, after Danone, a second French heavyweight in the dairy products market.

But is yogurt such a strategic industry? Does France really need two major players in the sector? Should the authorities exert pressure not to sell to the highest bidder, but rather a party with a French passport?

Yoplait is of course a solid company. But this producer, which is half as large as Danone in the yogurt market, is not a vital asset for France. If it remains French, that would be a good thing. If it does not, it is not necessarily a bad thing either. But can we go so far as to imagine it being Chinese?

To insist on Yoplait's next key shareholder being French could actually wind up being counterproductive. Because it is outside of France where Yoplait needs to strengthen its position. It does not need to convince the French to eat yogurt, but rather the Chinese and the Latin Americans. It makes most sense to take on a market like China alongside a partner with local knowledge. Yoplait and its French employees working there will remain the experts in its field for some time to come.

On the French market, the fear that a future Mexican or Chinese owner would manufacture Yoplait products abroad or in France with Chinese milk powder is unfounded. In the ultra-fresh sector, food processors source ingredients from local suppliers, not from other side of the planet.

Obviously, for the government, when tensions arise over the price of milk, it would be harder to push a Chinese shareholder than a French one. But such reasoning is no way to build an industrial policy.

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