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European Business News – Week ending March 25, 2011

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European Business News – Week ending March 25, 2011

March 27
10:52 2011

An outstanding feature of the past week has been the number of joint ventures formed, especially within the dairy sector. By sharing the cost and risk of an enterprise, joint ventures are becoming a popular vehicle for expansion in the current economic climate where investment capital is still limited. Joint ventures have long been used by spirits groups and major brewers to expand brand distribution internationally. Coca-Cola and PepsiCo have also employed a joint venture approach to develop their domestic and overseas bottling networks.

Two dairy joint ventures have materialised during the last seven days.

Two dairy joint ventures have materialised during the last seven days. Scandinavian and international dairy co-operative Arla Foods has allied with DMK, its German counterpart, to established 50/50 joint venture business, ArNoCo, which will invest Eur44 million to process whey for the global food manufacturing industry. DMK is being created through the merger of Nordmilch and Humana and will become Germany’s biggest dairy company and the sixth largest in Europe.

General Mills Enters Another Joint Venture

General Mills is set to pay Eur800 million to acquire PAI Partners’ 50% share of its Yoplait international yoghurt joint venture with Sodiaal.

US-based food group General Mills is set to pay Eur800 million to acquire PAI Partners’ 50% share of its Yoplait international yoghurt joint venture with Sodiaal, the French dairy group. The private equity company put its Yoplait stake up for sale last year. General Mills already operates the Yoplait franchise in the US.

Of course, General Mills already participates in two other major international joint ventures – Cereal Partners Worldwide and Haagen-Dazs Japan – which generated sales of $1.2 billion for the US group last year.

Established in 1991, Cereal Partners is a 50/50 partnership with Nestle and is the second largest breakfast cereals manufacturer in the world, selling products in more than 130 countries. General Mills is the second largest cereals manufacturer in North America. In February, Cereal Partners opened a new $50 million Innovation Centre in Switzerland. Haagen-Dazs Japan operates General Mills’ ice cream business in Japan and involves partnerships with Suntory and Takanashi Dairy both domestically and internationally.

Political Furore

Another major international dairy deal just completed involved French privately owned dairy company Lactalis increasing its shareholding in Parmalat, the leading dairy group in Italy, to 29% following the Eur744 million acquisition of a 15.3% stake. Lactalis is now the largest shareholder in Parmalat. The move has met with strong opposition from the Italian Government, which regards Parmalat as a strategic national asset and does not want to see it fall under foreign control. This is similar to the political furore created in France over PepsiCo’s reported interest in acquiring Danone in 2005.

PepsiCo is a partner in one of the two other joint ventures established in the past week. The soft drinks and snacks group is extending its existing North American alliance with Strauss Group, Israel’s second-largest food and beverage company. The two companies will now produce and sell fresh dips and spreads in key markets outside of North America, building on the success of the Sabra brand.

 

Global stevia sales will reach 11,000 tonnes by 2014, equivalent to $825 million by value.

Sweet Deal

The fourth 50/50 joint venture deal is between Nordzucker, Europe´s second biggest sugar producer, and PureCircle of Malaysia, a global leader in the production of high purity stevia products. They have formed NP Sweet for the development and marketing of products that combine the natural benefits of both sugar and stevia to meet the fast growing demand for reduced calorie naturally sweet applications from food and beverage manufacturers across Northern and Eastern Europe.

The deal follows a similar alliance earlier this year between US-based Cargill and Silver Spoon, part of Associated British Foods, which formed an exclusive partnership for the UK distribution and marketing of the Truvia brand of tabletop sweeteners, made with rebiana that originates from the stevia leaf.

A new study by food and drink consultancy Zenith International estimates that worldwide sales of stevia reached 3,500 tonnes in 2010, a 27% increase on 2009, taking its overall market value to $285 million. With approval expected in Europe later in 2011, Zenith forecasts that the global stevia sales will reach 11,000 tonnes by 2014, equivalent to $825 million by value.

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