The group announced yesterday that it is to form a new entity with Italian group Ambrosi in France. The entity will offer customers a wider range of Swiss and Italian cheeses to drive the further growth of its brands. Emmi's move comes as a response to the significant upheavals in the EU's dairy sector as a result of reforms to the EU's Common Agricultural Policy (CAP). The reforms mean a cut in subsidies for EU processors, leading to higher costs and a more uncertain supply. The group said that the new entity, which will be operate under the name Ambrosi Emmi France, will considerably strengthen its position in cheese production by the time it comes into operation from 1 January 2008. Emmi reported on 1 July this year that it holds a 25 per cent stake in Ambrosi's operations. The company said the relationship will boost its international sales. The two processors will continue to market their brands independently in the Italian market. The strategy comes as the French dairy market undergoes major restructuring to better adapt to the changed economic conditions on the world market, along with the cut in CAP subsidies. In June, French groups Sodiaal and Bongrain announced a merger of their production facilities and staff linked to their cheese brands, in a bid it claims to boost the products and services it can offer consumers.