Arla Foods has acquired a subsidiary of the UK’s biggest organic dairy brand Yeo Valley, in an ambitious move to persuade British consumers to ‘trade up’ to organic dairy.
Arla, the world’s biggest producer of organic dairy products, announced this week that it will acquire Yeo Valley Dairies Limited, a subsidiary of the Yeo Valley Group Limited. 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.
Commenting on the deal, Peter Giørtz-Carlsen, executive vice president and head of Europe in Arla Foods, 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.” Currently, only 4% of milk sold in the UK fresh milk market is organic, which compares with far greater shares of organic in the milk market in Germany (10%), Sweden (16%) and Denmark (29%).
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
“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,” says Peter Giørtz-Carlsen.
In the UK, the Arla Organic Free Range milk has driven 60% of all the growth within the organic milk category in the last 12 months, with 70% of all Arla Organic Free Range milk sales attributable to customers who would have not previously purchased organic milk.
The company believes that with one in four households now purchasing organic products, there is opportunity for the dairy sector to convert more of its customers from standard to organic dairy. Fuelling this growth and meeting the growing needs of consumers requires investment in innovation and range under both the Yeo Valley and Arla brand, it says.
Tim Mead, organic farmer and custodian of the family business comments: “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.”
Completion of the transaction will take place following approval by the UK Competition and Markets Authority.