26 October 2001

NZ joint venture

NEW Zealand Milk, which markets Anchor butter in the UK, is to form a joint venture marketing operation with Arla Foods, maker of Lurpak.

Under the agreement, bulk NZ butter will be packed using spare capacity at Arla plants in Sweden and Denmark.

The joint venture will begin in early 2002, subject to regulatory approval, but has yet to be given a name. It will lift the new companys market share in the UKs butter and margarine sector to 16%. Unilever, the maker of Flora, has the biggest share with 32% of the market.

The move will mark the end of New Zealand Milks butter processing operation in the UK. Its 80,000t butter processing plant in Swindon will probably close sometime next year.

New Zealand Milks managing director for Europe, Tim Gibson, says the joint venture marketing company would then buy the finished butter from an EU factory and sell it on to Arla, which would market it to retailers.

"The move is consistent with the rest of industry," says Mr Gibson. "We need to consolidate to remain competitive. Its a scale game, and we need scale." &#42