Arla acquires Kraft’s Middle East & Africa cheese business from Mondelez

DENMARK – European dairy cooperative Arla Foods has announced that it has agreed to acquire Mondelez International’s processed cheese business in the Middle East and Africa region, currently licensed under the Kraft brand.

The transaction also gives Arla full ownership of a state-of-the-art cheese production site in Bahrain, granting it a strong hold in the branded cheese production in the Middle East.

The production site has a capacity exceeding 66,000 tons and includes an on-site innovation pilot plant.

According to Arla, the Middle East and North Africa (MENA) is one of the key geographical regions in Arla’s strategy, Good Growth 2020.

Middle East & North Africa (MENA), which is the company’s largest market outside Europe, has more than doubled its sales organically since 2010 and expects sales in this region to reach US$637 million this year.

The company sells cheese in the region under the Puck brand, butter under the Lurpak brand as well as milk powder and UHT milk under the Dano and Arla brands.

“This acquisition is a game-changer for our MENA business.

We have an established and growing business in the Middle East and know our consumers and customers well in this part of the world.

As such, this deal is an excellent strategic fit for us as it enables us to both expand our branded presence in the cheese category and secure the local production capacity we have been looking for to continue to grow our business,” said Arla CEO Peder Tuborgh.

Arla said the deal opens new commercial opportunities in the region since it maximizes capacity for processed cheese.

Products sold in the MENA region are produced inEurope, with some local production also placed in Riyadh, Saudi Arabia, and the acquisition strengthens its regional supply chain through scaling and efficiency.

“By expanding our branded portfolio and local supply chain in one go, we will be able to bring new commercial opportunities to our customers quicker and better.

Over time, the site in Bahrain will also allow us to base the production on high-quality milk from our farmer owners in Europe,” said Executive Vice President of Arla’s International business, Tim Ørting Jørgensen.

The deal is expected to take effect by end of May 2019.

Mondelez, world’s leading confectioner separated from Kraft Foods, a precursor to Kraft Heinz and the sale even as Mondelez’s licence to sell products in the region under the Kraft brand is expected to expire in 2020.

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