Lala History

1.-History of the company and the brand

Providing Better Milk for Mexico: 1949-99

Lala was founded in 1949 in Comarca Lagunera, also called La Laguna (hence the Lala name), and this region remains its principal production area. Located in eastern Durango and western Coahuila states, the region is fertile but hot and dry, requiring irrigation from rivers and underground aquifers. Cotton growing, once the chief agricultural activity, was abandoned, due to low prices, in favor of dairy farming. Green Revolution scientific and technical advances, and capital--including public and foreign funds--enabled Lagunera to develop the infrastructure required to become Mexico's leading dairy farming region. Pasteurization of milk, beginning in 1950, defeated the scourge of brucellosis(undulant fever), and the import of Holstein cows greatly fostered productivity.

Originally Lala was a cooperative credit union for milk producers in Comarca Lagunera who needed to pool their resources to obtain financing for the necessary infrastructure. The Unión de Crédito de Productores de Leche de Torreón was established in 1949 and transformed into the Unión de Crédito Industrial y Agropecuario de La Laguna, S.A. de C.V., in 1975. This enterprise began pasteurizing milk in 1950 and installing automatic milking machines in 1955. The growth of a modern dairy industry required a number of specialized enterprises, including those providing irrigation technology, veterinary services, and equipment and materials, generally imported, including fertilizers, seeds, semen, andantimicrobial products. It involved development of artificial insemination and transplant of embryos, the introduction of enriched feed to supplement alfalfa and corn silage, the use of chemicals and pharmaceuticals, automatic milking machines, farm machinery, milk processing equipment, cold tanks, and the bettering of conditions for the care and management of cattle. At the same time, it required vertical integration ranging from forage production to distribution and commercialization of the end products. By 1996 Lala's producers had a combined herd of 128,218 cows producing an average of 8,239 liters each per year.

Lácteos Laguna was founded in 1966 to exploit the market in central Mexico, beginning with Mexico City. A pasteurization plant was acquired in Acapulco in 1972 to serve cities in the states of Guerrero and Michoacán. Another plant opened in Mexico City in 1976 and in Monterrey in 1978. Lala Derivados Lácteos was founded in 1982-83 for the production and marketing of cheese and yogurt products. Lala Productos Químicos was established in 1983 to meet strict hygienic standards by employing detergents, disinfectant products, and germicides. In time, this unit diversified its production with veterinary medicines and household cleaning products. Pasteurizadora Lala del Norte was created in 1986 to sell Lala's products along the Mexican frontier with the United States, and Ultra Lala was established in the same year to produce ultrapasteurized milk in antiseptic containers that did not require refrigeration and had a shelf life of more than three months. A Durango pasteurization plant was acquired in 1992.

The federal government controlled pasteurized milk prices in Mexico from 1974 to 1989, and all controls did not end until 1996. While the dairy industry chafed at restrictions on the prices it could charge, it also received considerable subsidies in the form of below market credit and electricity rates. Nevertheless, it maintained during the 1990s that it needed help to compensate for the high cost of cattle feed (70 percent of total costs) and competition from subsidized farmers in the United States and Europe. "The government has to support the milk industry in Mexico," Jesús Raúl Villareal González, Lala's chairman of the board, told James Blears for an article in Business Mexico. Villareal, who was also head of Mexico's Milk Producers Association, added, "It's like the tortilla or frijoles [beans], part of the basic diet."

As of 1996, Lala was one of six Mexican enterprises that dominated pasteurized milk production. The industry was experiencing a shakeout in which companies were finding it hard to control costs and compete unless, like Lala, they were engaged in every area of production and services. Lala's extensive network of companies included Envases Especializados de la Laguna, S.A. de C.V. In 1998 this liquid packaging firm formed a joint venture with Elopak, a Norwegian company. Lala and Elopak shared ownership and operating control of the new company, Envases Elopak, S.A. de C.V. Also in the late 1990s, Lala added more new products, including various new yogurt flavors.

Lala in the 21st Century

In 2000 Grupo Industrial Lala consisted of 23 companies employing 10,500 people, and it controlled 26 percent of the fluid milk market in Mexico. Lala Transportadora was running 62 tank trailers to collect raw milk each day from the 220 dairy farms supplying the enterprise. These farms were owned by individual Lala stockholders. "You have to be a stockholder to supply milk to Lala; suppliers are the company's only stockholders," a Lala executive told Foss Farrar for an article in Bulk Transporter. The tank trailers delivered the milk to Lala Enfriadora,

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