Paris-based Danone owns 80 per cent of the newly created Stonyfield Europe, while US Stonyfield Farm owns the remaining 20 per cent.
On its creation, the European subsidiary also announced its first business move- the acquisition of over a third of family-owned Irish firm Glensik, which it recognised as a "pacesetter" for organic dairy in Europe.
According to Gary Hirshberg, chief executive officer of Stonyfield Farm and now chairman and managing director of Stonyfield Europe, the new venture aims to help Glensik increase its production capacity and marketing and consumer education activities.
"It is also Stonyfield Europe's first step in our own agenda of leveraging our 23-year US experience on behalf of family farmers and consumers to help catalyze the development and expansion of similar grassroots organic enterprises," he said.
Indeed, just last month it emerged that Danone was to launch a new range of organic yoghurts in Europe, made by Stonyfield Farm, in which it acquired an 80 percent stake two years ago.
The French food giant was said to be investing $66m (€51.9m) into the Stonyfield plant in New Hampshire, US, in order to increase production capacity to cope with its new export market. Danone said it intended to use the launch to capitalise on growing demand for organic dairy products across the bloc, but had not yet settled on a European brand name or distribution plan.
On yesterday's announcement of the establishment of Stonyfield Europe, Franck Riboud, chairman and chief executive officer of Danone said "the European market for organic dairy products is growing, but it remains a fairly discreet presence. With Stonyfield Europe, we hope to capitalize on the success and unique expertise of Stonyfield Farm to speed up its development."
Glensik, which was established in 1987 as an offshoot of the successful Tullamore Dairies, will remain majority owned by its founding family. The firm currently sells a range of products including organic milk and yogurts, and last year reported sales growth of over 10 per cent.
"We've been approached over the years by other companies interested in Glenisk, but if five or even 10 years ago I had to name my top choice in terms of partners, it would have been Stonyfield, because of its commitment to organics and record of success," said Vincent Cleary, Glenisks sales and marketing director.
"With Stonyfield Farm, Glenisk will find its way to the next level of our own development. This investment comes after a lot of soul-searching, probably due to the fact were a family operation, with personal histories tied to the company, but Glenisk will evolve into a stronger entity as a result," he added.
Organic milk sales in the UK grew 91 per cent in the 12 months up to last November and had grown 30 per cent per year for the decade before that, a report by the Organic Milk Suppliers Co-operative (OMSC) revealed.
Sales have now topped £100m (€146.7m) per year thanks to organic milk's healthy and environmentally friendly image.
OMSC's report says Britons spent a collective £1.25bn on organic food in 2005, a far cry from the £100m in sales made by the sector a decade ago. The UK was Europe's fourth largest organic food market in 2003, behind Italy, Germany and Spain, according to market researcher Organic Monitor.