World’s Top Dairy Maker Plans Chicago Expansion After $3.2 Billion Kraft Deal

The world’s largest dairy maker, France’s Groupe Lactalis, is expanding in Chicago after a $3.2 billion deal to acquire cheese brands from Kraft Heinz Co.

(Bloomberg) — The world’s largest dairy maker, France’s Groupe Lactalis, is expanding in Chicago after a $3.2 billion deal to acquire cheese brands from Kraft Heinz Co.

The family-owned company plans to hire almost 100 people at its offices in the Windy City over the next year, according to Peter Cotter, chief executive officer of Lactalis Heritage Dairy — the business that runs the natural cheese brands bought from Kraft.

The expansion comes as Lactalis prepares to separate its supply chain and finance systems as part of the integration of Kraft brands including Cracker Barrel and Knudsen. The little known, secretive French dairy giant has in recent years been growing its business in the US, which is now its second-largest market.

“The US is obviously a much bigger country from a land-based standpoint than France is,” Cotter said during an interview at the firm’s office in Chicago’s West Loop neighborhood. “The absolute growth opportunity that exists I think makes it the perfect growth market.”

Lactalis agreed to buy Kraft’s natural cheese business in 2020 and has since then completed the first phase of separation, which included sales, marketing, human resources, the commercial area and manufacturing, Cotter said. A transition agreement for the supply chain and finance systems will end in March, he said.

Lactalis, founded in 1933 and known for its President cheese, is now hiring to build out those areas and expects to have about 220 employees in its Chicago offices by the end of the year, bringing the division’s total workforce to 850. Lactalis Heritage Dairy represents 39% of the group’s total US business.

Lactalis says hiring is still challenging in engineering, manufacturing and other technical areas, but the company is confident it can continue bring in employees from firms that have decided to leave the city. Cotter also touted the company’s locations in a trendy neighborhood close to multiple commuter rail lines as enticements to lure talent.

Corporate Departures

“We’ve had a number of folks that we’ve taken on from from other businesses in the area that have either downsized or shifted their location,” Cotter said, without naming the companies.

Caterpillar Inc., Boeing Co., and Tyson Foods Inc. are among firms that have departed or scaled back in the Chicago area, as well as billionaire Ken Griffin’s Citadel hedge fund.

A tight labor market is one of the reasons inflation remains sticky, Cotter said. Fuel costs have declined but are still not in line with historical levels, and dairy farmers are still being squeezed by high feed costs, fueling concerns that some will cull herds or pull out of the market altogether, reducing supplies down the road.

“You will see softening from an inflation standpoint, and we’ll be able to pass some of that value along to consumers, but some of it has to stick because the cost equation is not going to go all the way back to the original,” Cotter said.

(Updates with workforce in sixth paragraph. A previous version of this story corrected number of Chicago-based employees.)

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