DMV and Arla food ingredients to merge?
Ingredients could soon be part of the world's largest farmer-owned
dairy company as their owners Campina of the Netherlands and
Denmark's Arla Foods announce plans to merge, writes Lindsey
Partos.
Combined the two leading European dairy co-operatives with 27,000 employees, to be called Campina Arla, will have annual revenues of €10bn.
The ingredients division would contribute about a tenth of this figure, some €1.38 billion, rolling over 665 000 tonnes of ingredients.
But customers will have to wait a few months to find out the future of their supplies as regulatory bodies, and the board at Campina Arla, decide on the fate of the ingredients units in the merged group, slated for the middle of next year.
Consolidation in the downstream sector of the food industry, which if cleared Campina Arla is a prime example, continues as suppliers attempt to keep up with their increasingly powerful and globalised customers.
As such industry observers will not be surprised by the merger, particularly set against the backdrop of recent European supermarket wars leading to slashed prices, and reduced subsidies from Brussels that have severely knocked individual dairy farmers.
If cleared, the world's second largest dairy company behind Swiss giant Nestle, will be in a stronger position to face market pressures.
"By joining forces the company will become an even more attractive business partner for international retailers, and the new company will establish a sound basis in a dairy world that is feeling the pressure from new EC policies," said Justinus Sanders, the new CEO of Campina Arla, and currently chairman of Campina.
Both ingredients arms - rooted in dairy based ingredients - told FoodNavigator.com it was too early to comment on the impact the merger might have on their business structure.
But for the few thousand employees implicated in the two ingredients firms, their concern will be the merger may bring job losses through streamlining of operations, particularly those duplicated.
Arla Food ingredients is enjoying growing attention for its low calorie sweetener tagatose, not yet approved on EU markets the sweetener is used in a growing number of food formulations in the US as food makers develop their product line to feed the increasingly health-conscious consumer.
Among DMV's range, that contributed €500m to Campina's €3.7 billion turnover, is its natural milk protein lactoferrin product, a leading player in the burgeoning value-added whey fractions market currently enjoying strong growth, in some parts of the world hitting 20 per cent per year.
In a statement yesterday Campina Arla said the main headquarters will be in Copenhagen, with an ancillary hub in Zaltbommel in the Netherlands and administrative centres in rural Denmark, Stockholm and the Netherlands.
At €6.2 billion in dairy turnover for 2003 Arla Foods, against Campina's €3.7 billion, would contribute the largest chunk to the merger.
