Arla Foods eyes German dominance with Allgäuland acquisition

By Oliver Nieburg

- Last updated on GMT

Related tags Arla foods Cheese

Arla Foods eyes German dominance with Allgäuland acquisition
Arla Foods has announced the acquisition of German based dairy producer Allgäuland-Käsereien as it aims to become a major player in the domestic dairy market.

The acquisition, which took effect yesterday following EU approval, sees Arla boost its production capacity by 232m kg of milk and helps it seize a larger share of the German market following a merger with North German fresh products and butter producer Hansa-Milch earlier in the year.

Allgäuland-Käsereien is based in the Southern part of Germany and holds four production plants, producing primarily cheese, butter and fresh products. In its last year the company turned over €307.8m.

Arla were unwilling to disclose the price of its latest purchase.

Domestic potential

Theis Brøgger, chief press officer at Arla Foods told “We believe that Arla has a lot to contribute to consumers in Germany. Many of our products are already very popular among the German consumers and we wish to play an active part on the German market, because we see a great potential for our products there.”

The German dairy market was worth €17.5bn in 2009 and showed growth of 1.4% between 2005 and 2009, according to the latest figures from Research And Markets.

The market analysts also forecast 1.7% growth in the German market between 2009 and 2014.

International expansion

Tim Ørting Jørgensen, Arla Foods executive vice president said: “We see important potential in Allgäuland-Käsereien’s cheese production. They produce excellent speciality cheeses for which there is important international potential and it is for this reason that the dairy is of interest to Arla Foods.”

When pressed upon other nations in which Allgäuland products could perform, Brøgger said: “With the acquisition approved this week, we will now begin the actual work of integrating Allgäuland into Arla. We are looking at several export markets for some of their products, but we are not yet ready to disclose the specific plans at this stage. “

Cheese showing promise

Cheese was the most lucrative segment for the German dairy market in 2009, accounting for 31.6% of the market's overall value, according to Research And Markets data.

Arla said it was hoping to capitalise on the vibrant cheese market with the Allgäuland acquisition.

“Some of their products will supplement the cheeses Arla already makes, among them the cheeses marketed under the House of Castello quality brand. We see great potential in Allgäuland’s products and not only in Germany,”​ said Ørting Jørgensen.

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