Arla will acquire Yeo Valley Dairies, a subsidiary of the Yeo Valley Group, as it aims to boost its organic dairy business in the UK.
The transaction will give Arla Foods the rights to use the Yeo Valley brand in the UK market for milk, butter, spreads and cheese under an intellectual property license with Yeo Valley.
The Yeo Valley yogurt, ice cream, cream and desserts business will continue to be run independently through Yeo Valley Group, which remains under the ownership of the Mead family.
Currently in the UK, 4% of milk sold in milk market is organic, which compares with far greater shares of organic in the milk market in Germany (10%), Sweden (16%) and Denmark (29%).
With one in four households now purchasing organic products, Arla believes there is an opportunity for the UK dairy sector to convert more of its customers from standard to organic dairy.
Peter Giørtz-Carlsen, Arla Foods head of Europe, said: “The potential for organic dairy products in the UK is significant, and our investment in range through this licensing agreement with Yeo Valley provides a significant opportunity to offer a greater choice to consumers at attractive prices. Our ambition is to encourage customers in the UK to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories.”
“As the world’s leading producer of organic dairy products, Arla has promoted and expanded our sales of organic products across its European core markets over the past decade. It is a valuable part of our offer to consumers in Denmark, Sweden, Germany, the Netherlands as well as China and, most recently, in the Middle East.
“Now we take a determined step to make organic dairy products more available to UK consumers as we believe that organic milk has a key role to play as consumers increasingly look for ways to make their diets healthier and more natural.”
Tim Mead of the Yeo Valley Group added: “Arla’s farmer-owned credentials are aligned to the values and ethos that the Yeo Valley brand is based on – supporting British family farms. We have a long-held ambition to grow organic dairy in the UK.”
The news comes a week after Arla announced it will invest €527 million in 2018 in its global business as it aims to meet growing demand for its products.
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