Arla Foods is looking to strengthen its presence in the Chinese dairy market by signing agreements with China Mengniu Dairy Company and with the food and beverage company, COFCO Corporation.
The agreements will boost exports to China and make Arla an indirect shareholder of China Mengniu Dairy Company Limited along with Mengniu's single largest shareholder, COFCO Corporation.
Arla and Mengniu will establish the China-Denmark Milk Technology and Cooperation Centre, which is to provide expertise on milk quality, traceability and controlled milk production on farms. This agreement is a framework agreement supported by China’s Ministry of Agriculture and Denmark’s Ministry of Food, Agriculture and Fisheries.
The move is expected to increase Arla’s total turnover in China five-fold, by 2016.
Since 2005 Arla has primarily sold powdered milk products on the Chinese market, through a joint venture with Mengniu. Now the Danish company has decided with its partner to further develop the dairy business together and extend the category from milk powder to a full range of dairy products.
The current joint venture will become part of Mengniu, of which Arla is now to become an indirect shareholder along with COFCO.
The agreements will mean that a series of new Arla products are to be introduced on the Chinese market through Mengniu’s sales channels as one of the many brands in Mengniu’s product range.
Source: Arla Foods
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