UK – Danish dairy cooperative Arla Foods Limited is acquiring Yeo Valley Dairies Limited, a subsidiary of the Yeo Valley Group Limited, as it seeks to grow its line of organic milk products in the key UK market.

The transaction will give the farmer-owned dairy cooperative the rights to use the Yeo Valley brand in milk, butter, spreads and cheese under an intellectual property licence with Yeo Valley.

However, the Yeo Valley yogurt, ice cream, cream and desserts business will continue to be run independently through Yeo Valley Group, a family owned dairy company.

“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 at attractive prices.

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.”

Arla says that 25% of its households currently buys organic milk products, and is seeking the to convert more of its customers from standard to organic dairy.

To fuel this growth and meet the growing needs of consumers the company will need investment in innovation and range of products that the Yeo Valley brand will add to Arla’s current brand.

“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,” adds Pietrangeli.

Through the licence to use the Yeo Valley brand, we believe that we can further drive organic penetration of the milk market.”

According to Arla, in the UK only 4% 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%), Sweden (16%) and Denmark (29%).

“This is a great chance for us to catch up with our European neighbours,” said Pietrangeli.

“Organic milk has a key role to play as consumers increasingly look for ways to make their diets healthier.

Its production, without the use of artificial or manufactured herbicides and fertilisers and with high standards of animal welfare, are key reasons it is in growth, especially with younger consumers.”