The split has meant that Arla Foods now has full ownership of Arla Foods Hellas, this was previously shared between the companies with 60 per cent owned by Arla and 40 per cent owned by Delta Dairies. Vigla, the existing Greek production company, is now owned fully by Delta Dairies.
In 2002 the EU decided to protect the name of Feta cheese. The EU proposed that only cheese produced in some areas of Greece where the product originated from would be able use the name Feta.
The EU's protected designation of origin proposal (AOC) is designed to preserve the rights products. In Switzerland for example chesse can only be named Raclette if it is produced in the Swiss Canton Valais where it was first made. Dairy market commentators claimed that this would bring about an increase in demand in the area where the cheese originated from.
Such a proposal is claimed to bring about advantages for the original area where the food was produced. The EU claim that when a name is protected it brings clarity to the market place and protects the interests of producers and consumers, thus a higher demand could be expected.
However, the case with Arla Foods production of Feta in Greece tells a different tale. The company claims that the move to terminate its production in the country was brought about by unsatisfactory results from the venture.
Arla Foods divisional director, Torben Olsen, explained the companies decision, he said:
"We are now focusing on Arla Foods' products and restructuring our business in Greece in order to achieve a satisfactory result for 2004."
However, the companies have agreed to continue with their sales partnership and this will see feta cheese exported into third countries.
It is estimated that Arla foods exports annually DK 350 million (€47 million) worth of cheese and Lurpak butter into Greece. The two companies entered into the joint venture agreement in November 2000, and Arla Foods has stated that it will continue importing dairy products in the Greek market.