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 would allow the processor to use the Yeo Valley brand for milk and cheese products under an intellectual license.
At present, Yeo Valley don’t make any cheese opening the possibility for an expansion of the brand’s current range.
The acquisition doesn’t involve any direct suppliers, and Arla told Farmers Weekly that existing producer arrangements and contracts would remain in place for at least three years.
Yeo Valley currently receive the majority of its milk from organic dairy co-op, OMSCo.
It’s not every day you wake up to share a fantastic piece of news which will help us
significantly step up our UK ambitions for organic dairy in the UK! https://t.co/QbTuudXNKM
— Tomas Pietrangeli (@T_Pietrangeli) February 8, 2018
“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% of all the growth within the organic milk category in the past 12 months, with 70% 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.”
Arla values ‘a perfect fit’
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.