Arla to acquire Yeo Valley Dairies
The UK's largest dairy co-op is set to get bigger following the acquisition of the dairy arm of Yeo Valley.
Arla said the deal will allow the processor to use the Yeo Valley brand for milk and cheese products under an intellectual license, opening the possibility that Arla organic products could be set for a rebrand.
It comes after Arla recently announced plans to invest almost half a billion pounds in 2018 – including at its packing facility in Oswestry.
"The potential for future investment in the range through this licensing agreement with Yeo Valley provides a significant opportunity to offer a greater choice to consumers at attractive prices, said Tomas Pietrangeli, managing director at Arla Foods.
"Our ambition is to encourage customers to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories."
Mr Pietrangeli added, "Arla organic free-range milk has driven 60 per cent of all the growth within the organic milk category in the past 12 months, with 70 per cent of all Arla organic free-range milk sales attributable to customers who would have not previously purchased organic milk.
"Through the licence to use the Yeo Valley brand, we believe we can further drive organic penetration of the milk market."
Tim Mead, Yeo Valley organic farmer and custodian of the family business, said Arla's farmer-owned credential were a perfect fit with the ethos and values of Yeo Valley.
"We have a long-held ambition to grow organic dairy in the UK, because at Yeo Valley, we believe organic dairy is better for the planet, for the cows and for health," added Mr Mead.
Completion of the transaction will take place following merger approval by the UK Competition and Markets Authority.
This year Arla is to invest in new, expanded and improved production capacity as well as innovative technology, which will see £72 million be spent in the UK.
More than £30 million will be split across Arla’s sites in Oswestry, Melton Mowbray, Llandyrnog, Malpas, Oakthorpe, Stourton, Settle and Trevarrian.
The figure also includes non-site specific investments which will enable Arla continue to drive growth for the farmers which own it and capitalise on increasing demand for dairy.
Arla’s carbon net zero site in Aylesbury will see the biggest proportion of UK spend with an investment of £33.6 million as it becomes the UK home to the production of Arla’s Lactose free dairy products using milk from UK farmers.
