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Arla Foods enters enters JV in Indonesia, deal with DMK Group

Staff Writer |
Arla Foods is set to strengthen its business in Southeast Asia by establishing a joint venture with PT Indofood CBP Sukses Makmur (ICBP), one of the leading fast-moving consumer goods companies and dairy players in Indonesia.

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Southeast Asia is a strategic growth region in Arla Foods’ strategy, Good Growth 2020, and the company is now taking another step towards building its business in the region.

The newly signed joint venture agreement with ICBP is set to expand Arla Foods’ presence in the Indonesian market.

With a population of more than 250 million people, 50 percent of them under the age of 30, Indonesia is the biggest market for nutritious dairy products in Southeast Asia.

The new joint venture company is called Arla Indofood Sukses Makmur. The shareholding composition of the joint venture will be 50 percent plus 1 share of the company to be owned by Arla Foods and 50 percent minus 1 share by ICBP. The joint venture will handle sales, distribution and production of dairy products.

Details about product portfolio, production and launch dates will not be made public at this time.

Arla Foods and German dairy company DMK Group have signed a third-party manufacturing contract that will see DMK produce 35.000 tons of mozzarella cheese for Arla per year at its Nordhackstedt site in northern Germany.

As part of the agreement, DMK will rebuild its Nordhackstedt site to become fully focused on mozzarella production. This will increase the supply of whey for the two companies’ joint venture ArNoCo, which produces whey protein and lactose at a neighbouring site and at Arla’s site Denmark Protein in western Denmark.

Today DMK’s cheese site in Nordhackstedt has a capacity of approx. 70,000 tons, of which half is dedicated to mozzarella cheese. DMK will invest 15 mEUR to focus the entire capacity on mozzarella cheese by late 2018, after which they will initiate third party manufacturing for Arla.

Arla will supply 300-350 million kilos of milk for the production annually and will pay DMK to produce 35,000 tons of mozzarella cheese each year.

The two dairy companies collectively own the joint venture ArNoCo, which was established in 2011 at the Nordhackstedt site and since 2015 a state-of-the-art whey processing facility has been up and running.

As the mozzarella production at Nordhackstedt will increase, the site’s supply of whey for ArNoCo will go up as well.

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