JAPAN – Troubled dairy firm Snow Brand announced yesterday that it is to set up a milk joint venture with dairy farming groups and a bank.

Snow Brand will hold a 30% stake in the venture while its bank, Norinchukin, will take a 10% share. Dairy farming co-operatives Zen-noh and Zenakuren will hold 40% and 20% stakes respectively.

The new company will be worth around 40 billion yen (342 million euro) and is expected to be profitable by 2005. To achieve this, it aims to cut operating costs by 20% and will create a new brand name for all of its dairy products.

Control of Snow Brand, Zen-noh and Zenrakuren processing plants will be transferred to the venture, which will close three of the 18 factories.

The deal is Snow Brand’s attempt to return to profitability after the company posted huge losses for the last financial year.

In March, Snow Brand said it was considering merging operations with Zen-noh to try to raise capital lost after its Snow Brand Foods subsidiary went into liquidation following a beef mis-labelling scandal.