Snow Brand tries to forget its scandalous past

- Last updated on GMT

Related tags: Pasteurization, Milk

Putting the meat scandal behind it, Snow Brand Milk Products has
announced plans to form a joint venture with two co-op groups which
aims to become the Japanese market leader within two to three
years.

Snow Brand Milk Products, the Japanese group at the centre of a scandal regarding the fraudulent labelling of meat, has taken a major step towards putting its scandal-ridden past behind it by announcing the formation of a joint venture which will specialise in milk, other dairy drinks, yoghurt and fruit juices.

Snow Brand had already said it was planning to spin off its milk division, but details of the venture were sketchy. The group has now confirmed, however, that the milk unit will merge with two agricultural co-operatives, the National Federation of Agricultural Co-operative Associations (Zen-noh) and the National Federation of Dairy Co-operative Associations (Zenrakuren).

As yet, there is no name for the company, although the three partners said they were considering the creation of new brand names, perhaps in a bid to distance the new company from the problems surrounding Snow Brand.

The three partners said they hoped sales could eventually rise as high as ¥300 billion (€2.6bn), and that the company was expected to reach profitability by 2004 on sales of around ¥230 billion. The aim, the partners said, was to turn the new group into the leading player in the Japanese milk market and a major rival to the giant Meiji Dairy group.

Snow Brand said it planned to close its plant in Kurashiki, Okayama Prefecture, while both Zenrakuren and Zen-noh would also close down facilities, taking the total number controlled by the new group to 15. Some 1,000 jobs are likely to be lost as a result of the closures, but snow Brand said that up to 2,000 jobs could also be created elsewhere within the group.

Zen-noh will be the leading partner in the venture with a 40 per cent stake, while Snow Brand will control 30 per cent and Zenrakuren 20 per cent. Snow Brand's main creditor, the Norinchukin Bank, will take the remaining 10 per cent.

Related topics: Markets

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