FDBusiness.com

Scandinavian dairy group Arla Foods and the Northern Germany-based Hansa-Milch are considering merging. Representatives of the two dairy co-operatives are already engaged in talks. A decision by the cooperative members as to whether the merger is to come about will be taken in February-March 2011.

Arla Foods is owned by 7,200 farmers in Denmark and Sweden. It is known in Germany for its specialty cheeses Arla Buko, Castello and Arla Hohlenkase, for Arla Kaergarden and Lurpak butter.

Peder Tuborgh, chief executive of Arla Foods.

“Together with Hansa-Milch, we would be able to offer a complete portfolio of dairy products from one single supplier, which will enable us to become an even more attractive partner to the German retail trade,” explains Peder Tuborgh, chief executive of Arla Foods.

Hansa-Milch has long been a key player in the market in Northern Germany, where its Hansano brand makes it one of the most important providers of fresh dairy products, including milk, cream and quark from the region. For Hansa-Milch, Arla represents a strong international partner with an excellent track record in innovation.

“Coming together with Arla Foods would represent the next logical step for the business and would benefit our members,” says Uwe Krause, chairman of Hansa-Milch, which is owned by around 1000 dairy farmers in Schleswig-Holstein and Mecklenburg-Vorpommern.

It is a key element of the Arla Foods strategy to pay members as high a price as possible for their milk. In order to achieve this objective, Arla needs to grow its business further within Europe, and particularly in the important German market. Arla would be able to expand its presence in Germany through a merger with Hansa-Milch.