Ebro Puleva ends SDF alliance
fact that the Swiss group's know-how is no longer needed - has
prompted Spain's biggest food group Ebro Puleva to end its joint
venture with the company and go it alone in the Spanish yoghurt
sector.
A four-year alliance between Spain's Ebro Puleva dairy group and Swiss Dairy Foods of Switzerland, designed to help both companies tackle the growing strength of French multinational Danone in the Spanish market, has been brought to an end by Ebro.
The two companies joined forces in 1998 to take on dominant market leader Danone in the yoghurt market, but the subsequent failure of Swiss Dairy Foods has prompted Ebro Puleva to buy back the 16 per cent stake in their joint venture, Yofres, held by the Swiss group.
According to a report in the Spanish paper Expansion, Ebro Puleva had decided to end the venture as long ago as the start of the year, but the collapse of SDF was the final straw that broke the camel's back.
Last month we reported that SDF had been forced to call in the receivers as a result of massive debts of €547 million. A buyer is being sought for the profitable parts of the business (its cheese, ice cream and yoghurt businesses), and a number of production facilities have been sold off.
With SDF looking to sell off its yoghurt business, Ebro Puleva's decision to end its joint venture is perfectly understandable. The deal with SDF was designed to bring the Swiss group's know-how in added-value yoghurts and desserts to the Spanish company, which was best known as a milk producer, in order to better compete with Danone, and Ebro Puleva has learnt a lot in the four years since the agreement was signed.
In fact, the company told the paper that this was the main motivation behind the decision to end the joint venture. "We have decided to buy [SDF's] stake in Yofres because we now have the necessary know-how to produce the yoghurts ourselves. It is not because the Swiss group is currently going through a difficult period, or because we have decided to quit the yoghurt sector."
Whatever the real motivation for deciding to go it alone in the yoghurt sector, it is clear that Ebro Puleva means business. The company is Spain's biggest food group, and clearly sees taking on French group Danone as a matter of national pride.
It has recently begun selling the yoghurts and dairy desserts nationwide, after several years of marketing them only in the Andalusia region in southern Spain, and is planning to invest more than €9 million in a new production facility to add to the two it already has.
