The UK's largest dairy co-operative Arla Foods has announced it will acquire Yeo Valley Dairies in a bid to increase "greater choice" in organic to consumers.
The transaction will give the farmer-owned dairy cooperative the rights to use the Yeo Valley organic brand in milk, butter, spreads and cheese under an intellectual property licence with Yeo Valley.
The Yeo Valley yogurt, ice cream, cream and desserts business will continue to be run independently through Yeo Valley Group, which remains under the ownership of the Mead family.
Commenting on the deal, Tomas Pietrangeli, Managing Director at Arla Foods said the potential for future investment in range through this licensing agreement with Yeo Valley provides a "significant opportunity" to offer a "greater choice" to consumers
"Our ambition is to encourage customers to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories," Mr Pietrangeli explained.
With one in four households now purchasing organic products, Arla believes there is opportunity for the dairy sector to convert more of its customers from standard to organic dairy.
'Further drive organic'
To fuel this growth and meet the growing needs of consumers requires investment in innovation and range, Mr Pietrangeli said.
He added: “Arla Organic Free Range milk has driven 60 per cent of all the growth within the organic milk category in the last 12 months, with 70 per cent of all Arla Organic Free Range milk sales attributable to customers who would have not previously purchased organic milk.
“Through the licence to use the Yeo Valley brand, we believe that we can further drive organic penetration of the milk market.”
Currently in the UK, only four per cent of milk sold in the UK fresh milk market is organic, which compares with far greater shares of organic in the milk market in Germany (10 per cent), Sweden (16 per cent) and Denmark (29 per cent).
Completion of the transaction will take place following merger approval by the UK Competition and Markets Authority.
