Arla links up with Mengniu

Arla Foods has strengthened its presence on the Chinese market by signing agreements with China’s leading dairy company China Mengniu Dairy and with the leading food and beverage company in China, Cofco Corporation. As a result, Arla will become an indirect shareholder of China Mengniu Dairy Company Limited along with Mengniu’s single largest shareholder, Cofco Corporation, China’s leading food and beverage company.

The Danish dairy is also working with Mengniu to establish the China-Denmark Milk Technology and Cooperation Centre, which is to provide expertise on milk quality, traceability and controlled milk production on farms. This agreement is a framework agreement supported by China’s Ministry of Agriculture and Denmark’s Ministry of Food, Agriculture and Fisheries.

The new deal is expected to expand the Arla brand to new product categories, giving Chinese consumers access to more Arla’s products, the company says. It should increase Arla’s total turnover in China five-fold, by 2016 (last year, Arla’s total turnover in China was approximately €94.1m). Since 2005 Arla has primarily sold powdered milk products on the Chinese market, through a joint venture with Mengniu. The current joint venture will become part of Mengniu, of which Arla is now to become an indirect shareholder along with Cofco.