Swedish confectionery companies Cloetta  and Leaf are being  merged. The combined company will take the well established name of Cloetta and become a leading Swedish confectionery company with a strong base in the Nordic region as well as in Italy and the Netherlands. The new Cloetta will manage a portfolio of iconic brands and have pro forma net sales of SEK5.7 billion (Eur630 million) and recurring EBITA of SEK666 million.

The new Cloetta will have a strong portfolio of iconic, local, long-established brands including Kexchoklad, Lakerol, Polly, Ahlgrens bilar, Plopp, Malaco and Cloetta in Scandinavia, Jenkki inFinland, Sperlari and Saila in Italy and Red Band and Sportlife in the Netherlands. The two businesses are highly complementary and the merged company will have a full range of confectionery products by combining Cloetta’s strength in the chocolate segment with Leaf’s leading operations within the sugar confectionary segments.

Synergies in excess of SEK65 million annually are expected to be achieved within two years of closing the deal. In addition, Leaf is currently in the process of finalising a supply chain restructuring programme expected to yield another SEK45 million in annual cost savings in 2012.

Bengt Baron, currently chief executive of Leaf, will be chief executive of the new Cloetta.

Leaf has been owned by private equity firms CVC and Nordic Capital since 2005. Since the acquisition by CVC and Nordic Capital, Leaf has focused on developing and building brands and improving efficiency. Non-core businesses have also been divested.

The transaction values Leaf at SEK6.8 billion on a cash and debt-free basis implying an EV/EBITDA multiple of 9.0x for the twelve months ended August 31, 2011. Upon completion of the transaction, Cloetta shareholders will hold 42.4% and Leaf shareholders 57.6% of Cloetta’s enlarged issued share capital.

The merger is conditional upon approval by the shareholders of Cloetta at an extraordinary general meeting and approval by the relevant competition authorities. The EGM is expected to be held on or around February 15, 2012.

The boards of Milko and Arla Foods are discussing a proposed merger of the two Scandinavian dairy co-operatives. Following an unsatisfactory profit performance in 2011 and in order to avoid a future liquidity issue, Milko, one of Sweden’s largest dairy companies, approached Arla with a view to investigating the possibility of a merger.

“At Milko, our finances have been imbalanced for some time and in recent years we have been forced to take several radical cost-cutting initiatives. However, sales development has continued to be very weak in 2011 and the board has therefore decided to dramatically reduce the milk settlement price,” says Milko spokesman Lars Reyier. “The number of dairy cows in Sweden has fallen by almost 50% since 1985. As elected representatives we therefore have both a mandate and a responsibility to seek out modern and unselfish structural initiatives on the dairy market that can provide our members with the best possible market and settlement price for the milk they produce.”

The basic principle of the merger is that the Milko members will become co-operative members and owners of Arla Foods on an equal footing with existing Arla members. The Milko members will receive the Arla milk settlement price as soon as the merger has been completed and approved the Swedish Competition Authority.

 
“Arla has the strength and the structure required to develop the Milko company and to receive milk from the dairy farmers who will transfer to Arla as a result of the merger, regardless of the volume of milk they supply. A merger is in line with our ambition to inspire the Swedish people on food issues and to create conditions for continuing to produce milk in the region,” explains Ake Hantoft, chairman of Arla Foods.

Milko and Arla have already agreed on Arla’s purchase of the Sundsvall dairy. Arla will take over operations there on 1st July. The deal is, however, entirely separate from the merger negotiations.

DMK (which is being created by the merger of Nordmilch and Humana) and Arla Foods will establish a 50/50 joint venture to process whey for the global food manufacturing industry. The name of the new joint venture will be ArNoCo, and the two partners will invest a total of Eur44m in whey processing capacity. Eur35m will be used to build a whey processing plant at DMK’s cheese plant at Nordhackstedt in Northern Germany, and Eur9m will be spent at Arla Foods’ Danmark Protein plant in Denmark.

The joint venture will buy whey from DMK, estimated at more than 700,000 tonnes annually, and convert it into whey protein concentrate and lactose at the new plant. The Whey Protein Concentrate will then be dried at Arla Foods’ plant Danmark Protein. DMK will supply all related services on behalf of ArNoCo. Arla Foods Ingredients will market, sell and distribute the products to the global food manufacturing industry.

Peder Tuborgh, chief executive of Arla Foods.

The building of the new plant is expected to start in October 2011. The plant is scheduled to be in operation by the end of 2012 creating approx. 24 jobs.

Dr Josef Schwaiger, future chief executive of DMK, explains the rationale behind the move: “Expanding the ingredients business is one of DMK’s strategic growth areas. Its alliance with Arla in ArNoCo is therefore an important step towards higher value added and will strengthen the Nordhackstedt location’s position for the long term.”

Peder Tuborgh, chief executive of Arla Foods remarks: “We have identified the whey business as an important part of Arla Foods’ 2015 strategy and we are set to double the turnover of our whey business. This is an important step forward in achieving that goal.”

Arla Foods is a leader in the global market for whey protein and has other whey partnerships in Argentina, Germany, France, Norway and Sweden. The new joint venture is subject to approval by the relevant competition authorities.

Sugar, starch and fruit group Agrana is investing Eur56m in building a starch factory for the production of wheat starch and gluten at the site of its bioethanol plant in Pischelsdorf in Lower Austria. The facility will start operations at the end of 2013 and boost the workforce at the Pischelsdorf site from the current level of around 80 to 120 people.

The plan is for the new facility to process around 250,000 tonnes of wheat to make 107,000 tonnes of wheat starch and 23,500 tonnes of wheat gluten as well as 55,000 tonnes of wheat bran. The wheat starch produced at the plant will largely be employed in technical applications (eg in the paper industry). Wheat gluten is used in the baking sector. It is also used in pet food for cats and dogs. The bran produced serves as animal feed.

Through its production of wheat starch, Agrana, which has specialised in the production of corn and potato starch, will be offering customers an additional starch product and thereby rounding off its product range in the starch segment.

The construction of the new wheat starch facility at the site of Agrana’s existing bioethanol plant will generate important synergies given that raw material constituents unused in the production of wheat starch and gluten can be used in the production of bioethanol and the high quality, GMO-free, protein-rich, animal feed Actiprot.

Juice Business

Meanwhile, Agrana and Raiffeisen Ware Austria (RWA) are considering a merger of their fruit juice concentrate subsidiaries Agrana Juice Holding and Ybbstaler Fruit Austria in the form of a joint venture.

Agrana Juice Holding has 12 production facilities in Austria, Denmark, Hungary, Poland, Romania, Ukraine and China, as well as a warehouse in Germany. Ybbstaler Fruit Austria operates three processing plants, one in Austria and two in Poland.

The combined annual revenues of both fruit juice concentrate companies amount to around Eur250m. The joint venture will be fully consolidated by Agrana on the basis of a 50.01% stake. RWA will hold the remaining stake of 49.99%, with the option to increase this to 50 % after five years.

The joint venture will be based in Krollendorf, Lower Austria. The merger, which is subject to regulatory approval, is in response the increasing consolidation by both concentrate producers and bottlers within the European fruit juice market.

Greencore has announced that it does not intend to make a revised offer for Northern Foods. Greencore had initially proposed an all-share merger of equals between two of the leading convenience food groups in the UK, to create Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant brand strength in biscuits and frozen pizzas, respectively through the Fox’s and Goodfella’s brands. The merger was expected to yield cost synergies of £40m per annum within three years.

However, the proposed merger deal was subsequently trumped by a £342m cash offer for Northern Foods by Boparan Holdings, headed by chicken business entrepreneur Ranjit Singh Boparan.

Over the past few weeks Greencore has been working with a partner in order to agree a simultaneous sale of certain of the Northern Foods branded businesses. This approach was intended to provide significant funding and allow Greencore to acquire only the parts of the Northern Foods business with the greatest synergy potential.

This relatively complex structure required a range of stakeholders to reach agreement. However, after substantial investigation, the Greencore board has determined that an improved offer could not be concluded on terms which would deliver sufficiently strong returns to Greencore shareholders. Costs incurred, net of recoveries, will be treated as exceptional charges in the first half of Greencore’s 2011 Financial Year.

Meanwhile, Boparan has announced that it has acquired or agreed to acquire or received valid acceptances in respect of approximately 48.25% of the existing issued ordinary share capital of Northern Foods. The offer will remain open until 16th March 2011.

Dairy co-operatives Arla Foods of Scandinavia and Hansa-Milch Mecklenburg-Holstein of Germany are set to merge. A merger plan put forward by the boards of the two companies has now been approved by the members of the two co-operatives. The decision is being implemented with retrospective effect for the full 2011 financial year, and is enacted for January 1st 2011. The merger is not unexpected as both companies have already been co-operating successfully for many years.

Owned by 7,200 farmers in Denmark and Sweden, Arla Foods is the world’s fourth largest dairy group and operates successfully in both domestic and international markets. It is well known for its speciality cheeses such as BUKO, Castello and Hohlenkase, and for Lurpak butter. Owned by 1,200 dairy farmers, Hansa-Milch has enjoyed sustained success in northern Germany, and with its Hansano brand is one of the main providers of regionally-produced fresh dairy products such as milk, cream and quark.

The dairy business of Hansa-Milch, until now owned by the Hansa-Milch co-operative, will transfer to the ownership of Arla Foods under the merger arrangements. Manfred Remus, chairman of Hansa-Milch, who developed the merger plans together with the executive boards at Hansa-Milch and Arla Foods, will continue to head up the company with his team. In addition, consideration will be given in the coming months to the possibilities of expanding the Hansa-Milch plant in Upahl.

Hansa-Milch will now be known as Hansa Arla Milch. It remains a co-operative entity with its own members, and joins Arla Foods in that capacity. This means that the democratic structures are still preserved under the new entity of Hansa Arla Milch. In addition, the northern German dairy co-operative will have its own representatives on the boards and committees at Arla Foods.

Peder Tuborgh, chief executive of Arla Foods.

Under the merger of the two co-operatives, the Hansa Arla Milch farmers are being given a milk purchase guarantee from Arla Foods with no time restriction. In addition, Arla is assuring Hansa-Milch of a milk payment price calculated on the same basis as is used for its Danish and Swedish members.

“In previous years, the price we paid for milk was generally higher than that given by Hansa-Milch. This means that Hansa Arla Milch members can expect a higher price in future,” points out Peder Tuborgh, chief executive of Arla Foods.

The Arla Foods strategy includes paying members the highest possible milk price. “To achieve this objective, we need to continue to grow in Europe, and particularly in the important German market,” explains Peder Tuborgh. “Together with Hansa Arla Milch, our aim is to be one of the top three German dairy companies.”

The merger still has to be approved by from the competition authorities.

Boparan Holdings, headed by chicken business entrepreneur Ranjit Singh Boparan, now controls more than a third of Northern Foods, the leading UK convenience food group. On January 21st 2011, Boparan made a £342m offer for Northern Foods, which was recommended by the board of Northern Foods in preference to an earlier offer by Greencore involving an all share merger of equals.

By the end of January, Boparan, which had already assembled a 6.6% stake in Northern Foods prior to its offer, had increased its shareholding to 11.4%. Boparan now has in aggregate acquired or agreed to acquire or received valid acceptances representing approximately 34.4% of Northern Foods’ shares. Boparan has extended its offer deadline from March 2nd until 1.00 pm on March 16th 2011.

The board of Greencore has noted the announcement by Boparan relating to its cash offer for Northern Foods and the extension of the deadline. Greencore has confirmed it is still considering its options in relation to Northern Foods and a further announcement will be made in due course.

Greencore has been reported to have been seeking a partner to make an improved offer for Northern Foods with a cash element involved. It is understood to have held discussions on this matter with a number of major food groups and private equity firms.

Norway-based Orkla Brands has decided to merge its Russian chocolate and confectionery companies – Krupskaya and SladCo – into one entity named Orkla Brands Russia. The integration process has already started. Headquartered in St Petersburg, Orkla Brands Russia will have about 3,350 employees and a turnover of approx. RUB6.8b (Eur170m).

Vadim Ter-Israelyan has been appointed chief executive of Orkla Brands Russia and the chairman is Paul Jordahl, chief executive of Orkla Brands International.

“Combining the best of both organisations, we will improve our competitive position in a demanding Russian market. The establishment of Orkla Brands Russia is an important step in our long-term commitment in the Russian chocolate and confectionery business. We will keep and develop the local brands, thereby maintaining the Russian tradition and proud history,” says Paul Jordahl.

SladCo has been owned by Orkla since 2005. In 2010, the company had net sales of RUB3.8b and 2,100 employees. SladCo is the market leader in Urals and South Volga, with production in Ekaterinburg and Ulyanovsk.

Krupskaya was acquired by Orkla in 2006. The company is located in St Petersburg, and is the market leader in Northwest Russia. The company had net sales of RUB3.0b in 2010, and 1,250 employees. Over the past years, Krupskaya has fortified its position in Northwest Russia by acquiring several companies and trademarks.

In response to recent press speculation about whether or not it will amend its offer for Northern Foods, the board of Greencore has confirmed that it is still considering its options. Dublin-based Greencore, which is one of the UK’s leading convenience food groups, had proposed an all-share merger of equals with British rival Northern Foods. However, Boparan Holdings, controlled by chicken business entrepreneur Ranjit Singh Boparan, surpassed Greencore’s bid by making a cash offer of 73p a share for Northern Foods.

Boparan’s £342m offer has been recommended by the board of Northern Foods in preference to Greencore’s offer. Boparan has now built up an 11.4% stake in Northern Foods.

Patrick Coveney, chief executive of Greencore.

Greencore is reported to be seeking a partner to make an improved offer for Northern Foods with a cash element involved. It is understood to have held discussions on this matter with a number of major food groups, including Nestle.

Boparan has now posted its offer document, containing the full terms and conditions of the offer, to Northern Foods shareholders, together with the form of acceptance. Northern Foods’ shareholders have two weeks to respond to Boparan’s offer, although the deadline is expected to be extended should the 75% acceptance threshold fail to be reached. In anticipation of a counter-bid, Northern Foods shares have been trading at 75p.

Following its £342m bid for Northern Foods, Boparan Holdings has now increased its stake in the UK convenience food group from 6.6% to 11.4%. Boparan Holdings, which is controlled by food business entrepreneur Ranjit Singh Boparan, made a 73p a share offer for Northern Foods on Friday.

It has since acquired 22.4m ordinary shares of Northern Foods (representing approximately 4.8 % of the issued share capital) at a price of 73 pence per share. Bopara’s cash offer of 73p per share has been recommended by the board of Northern Foods in preference to an earlier all-share merger proposal by Greencore, the Irish and UK convenience food group.

In response to the recommended cash offer by Boparan Holding for Northern Foods, the board of Greencore has announced that it continues to believe that a combination with Northern Foods to create Essenta Foods represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders. Given the latest development, the board of Greencore will now consider its options and will make a further announcement in due course.

Boparan Holdings, which is controlled by food business entrepreneur Ranjit Singh Boparan, has made a 73p a share offer for UK convenience food group Northern Foods. Boparan already owns a 6.6% stake in Northern Foods.

The £342m bid was made following the granting of a two hours extension to the deadline given by the UK Takeover Panel and scuppers a proposed all-share merger of equals between Northern Foods and Greencore Group, another leading convenience food company in the UK.

The board of Northern Foods is recommending the Boparan offer and has withdrawn its support for the Greencore merger. Accordingly the Northern Foods directors are recommending that Northern Foods shareholders vote against the Greencore merger at the meetings on the 31st January 2011.

The proposed merger between Northern Foods and Greencore would have created Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant band strength in biscuits and frozen pizzas, respectively through the Fox’s and Goodfella’s brands. Essenta Foods would be owned equally by Northern Foods’ and Greencore’s shareholders. Integrating the two businesses was expected to yield cost synergies of £40m per annum within three years, with at least half being realised within the first 12 months after completion.

The Essenta deal had also proposed putting £15m a year into Northern Foods’ pension fund to plug a deficit of £142m. Boparan has also met with Northern Foods’ pension trustees and agreed terms.

The Boparan offer price of 73p a share represents a 61% premium to Northern Foods’ share price before the merger agreement with Greencore and is 52% higher than the implied value of Northern Foods under the Greencore merger proposal.

“The combined group will be one of Britain’s major food suppliers with a turnover of more than £2 billion. This will create significant opportunities which will benefit customers, consumers and employees. We look forward to working with the experienced Northern Foods team and combining our skills in product innovation and customer partnerships to create a larger business with enhanced prospects,” says Ranjit Singh Boparan.

Commenting on the offer, Anthony Hobson, chairman of Northern Foods, says: “This attractive cash offer provides shareholders with an immediate premium to the value of Northern Foods within Essenta Foods, the proposed merger with Greencore we announced in November 2010. The bid from Boparan is a compelling opportunity for our shareholders to realise a cash exit, and as such the board of Northern Foods will be unanimously recommending that Northern Foods shareholders accept Boparan’s offer.”

Ranjit Sing Boparan is chief executive of chicken processor the 2 Sisters Food Group, which he established in 1993, developing the company from a small scale frozen retail cutting operation into a £700m turnover international food business with ten manufacturing sites in the UK, six in Holland and one in Poland.

The British Panel on Takeovers and Mergers has ruled that Boparan Holdings, controlled by food business entrepreneur Ranjit Singh Boparan, must make an offer for Northern Foods or confirm that it does not intend to make an offer by January 21st 2011. The decision follows Boparan’s announcement on December 22nd last that it was considering a possible offer for Northern Foods.

The boards of Northern Foods and Greencore Group, which have already recommended an all share merger of the two convenience food groups to create Essenta Foods, have welcomed the Panel’s decision to set a timetable to clarify Boparan’s intentions.

If Boparan confirms that it does not intend to make an offer for Northern Foods then it is precluded from making any further approach for six months. The shareholders of Northern Foods and Greencore are due to meet on January 31st to decide upon the merger.

Food industry entrepreneur Ranjit Singh Boparan, who is head of the 2 Sisters Food Group, one of Europe’s leading poultry processors, is reported to be planning a £300m hostile bid for leading UK convenience food group Northern Foods, which could scupper its proposed merger with Greencore. Ranjit Singh Boparan has already assembled a 6.6% stake in Northern Foods.

The boards of Northern Foods and Greencore, also a leading player within the UK convenience food market, have already agreed terms on a recommended merger to create Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant band strength in biscuits and frozen pizzas. The merger is projected to yield cost synergies of £40m per annum within three years.

The board of Northern Foods has confirmed that is has received a letter from Boparan Holdings requesting access to certain information pursuant to Rule 20.2 of the City Code on Takeovers and Mergers. The letter contained no further details regarding Boparan’s intentions and Boparan has not made an offer proposal to the board, nor has it indicated the price at which any offer may be made.

Since the start of 2009, Ranjit Singh Boparan has acquired Storteboom Group, a Netherlands-based poultry processing business; Five Star Fish, a leading UK supplier of added-value, prepared fish to the food service sector; and famous seafood restaurant chain – Harry Ramsden’s. The prices of all three deals were undisclosed.

An acquisition of Northern Foods by Boparan Holdings is unlikely to yield the same level of synergies as the proposed merger with Greencore.

Scandinavian dairy group Arla Foods and the Northern Germany-based Hansa-Milch are considering merging. Representatives of the two dairy co-operatives are already engaged in talks. A decision by the cooperative members as to whether the merger is to come about will be taken in February-March 2011.

Arla Foods is owned by 7,200 farmers in Denmark and Sweden. It is known in Germany for its specialty cheeses Arla Buko, Castello and Arla Hohlenkase, for Arla Kaergarden and Lurpak butter.

Peder Tuborgh, chief executive of Arla Foods.

“Together with Hansa-Milch, we would be able to offer a complete portfolio of dairy products from one single supplier, which will enable us to become an even more attractive partner to the German retail trade,” explains Peder Tuborgh, chief executive of Arla Foods.

Hansa-Milch has long been a key player in the market in Northern Germany, where its Hansano brand makes it one of the most important providers of fresh dairy products, including milk, cream and quark from the region. For Hansa-Milch, Arla represents a strong international partner with an excellent track record in innovation.

“Coming together with Arla Foods would represent the next logical step for the business and would benefit our members,” says Uwe Krause, chairman of Hansa-Milch, which is owned by around 1000 dairy farmers in Schleswig-Holstein and Mecklenburg-Vorpommern.

It is a key element of the Arla Foods strategy to pay members as high a price as possible for their milk. In order to achieve this objective, Arla needs to grow its business further within Europe, and particularly in the important German market. Arla would be able to expand its presence in Germany through a merger with Hansa-Milch.

Danone and Unimilk have completed the merger of their fresh dairy products businesses in Russia and other CIS member countries. The new entity, controlled by Danone with a 58% equity interest and in which former shareholders of Unimilk own 42%, is the new leader for dairy products in the CIS area. Russia is now Danone’s largest market.

The board of directors of the combined business comprises three members, including the chairman, Andrey Beskhmelnitsky, representing Unimilk, and four members, including Bernard Hours and Pierre-Andre Terisse, representing Danone.

Filip Kegels, previously general manager of Danone Fresh Dairy Products in Eastern Europe and Central Asia, is in charge of operational management.

An integration committee has been set up to coordinate Danone and Unimilk teams during the integration phase and ensure that business targets are met. The new entity will be consolidated in Danone financial statements from December 1st, 2010.

Northern Foods and Greencore, two of the UK’s leading convenience food processors, are to merge to create Essenta Foods, a £1.7b turnover business with strong positions in private label production along with significant band strength in biscuits and frozen pizzas, respectively through the Fox’s and Goodfella’s brands. The merger is expected to yield cost synergies of £40m per annum within three years, with at least half being realised within the first 12 months after completion. The merger is scheduled to be completed during the second quarter of 2011.

Essenta Foods will be owned equally by Northern Foods’ and Greencore’s shareholders. The combined business will have a high quality asset base with 33 facilities in the UK, eight facilities in Ireland and two facilities in the US.

It will benefit from strong market positions in growing segments of the market such as sandwiches and ready meals, which in the UK have experienced 9.8% and 7.7% market growth respectively in the last year. Greencore and Northern Foods have invested significantly in their respective businesses in recent years and consequently the combined group will have sufficient capacity to support further market growth in these and other segments of the market.

“The proposed merger is a great opportunity to develop fully the potential of both companies. It will create a sustainable, top tier organisation which will be capable of delivering best in class food products and innovative solutions to its customers,” says Anthony Hobson, chairman of Northern Foods.

Patrick Coveney, chief executive of Greencore.

Patrick Coveney, chief executive of Greencore, who will head the merged group, comments: “Essenta Foods presents a compelling opportunity for all stakeholders. It creates a substantial chilled prepared food company in fast growing categories in the UK which is enhanced by strong branded positions in biscuits and frozen food. The investment case is underpinned by tangible cost synergies and the platform for further growth in the UK, Ireland and the US. The time is right for both companies to build a real ‘better than both’ business and I look forward to bringing together the teams from Greencore and Northern Foods to deliver on this opportunity.”

Northern Foods recently reported an operating loss of £9.5m including restructuring charges and a drop in turnover for the six months to October 2nd 2010 as improvements in its chilled foods and bakery businesses were offset by a loss in frozen foods. Although like-for-like sales grew 2.7% in the first half, and by 6% in the second quarter, total sales were £453.0m against £466.9m in the corresponding period in the previous year. Operating profit (pre-restructuring) was £17.5m (down from £20.5m in the previous year), reflecting chilled food profits up from £7.2m to £11.8m, bakery profits up from £8.2m to £10.3m but the frozen foods recording a loss of £4.6m, against a profit of £5.1m in the first half of 2009/2010.

69% of senior executives at UK-based food and beverage producers expect M&A activity to increase in the next 12 months, according to a report by Grant Thornton UK LLP which indicates that the sector has recovered early from recession. 20% (10 of the 50 respondents) said that they were planning to broker a merger or acquisition in that period.

By 13th August 2010, only 13 M&A transactions with a total value of £113m had been recorded involving food and beverage targets. The deal value was low compared to 2009, when this sector accounted for 27 deals with a total value of £14.3b. However, the 2009 result was inflated by Kraft’s £13.7b takeover of Cadbury (adding Cadbury’s net debt to the purchase price).

“Food and beverage producers had to digest sharp increases in input prices in 2007 and 2008, leaving the survivors in good shape to bear the recession. Most producers are already targeting growth, while 43% of our respondents are still cutting costs,” comments Trefor Griffith, corporate finance director at Grant Thornton.

In terms of growth strategies for the next 12 months, 46% of respondents are considering expansion into new markets, compared to 66% who are considering new product launches.

“It is remarkable that not a single respondent to the food sector survey highlighted competition from foreign firms as a significant challenge and less than half of them said that the weakness of Sterling was bad for business. Successful British exports include ready meals to France, Indian sauces to Spain, cheeses to Japan and breakfast cereals to China,” he explains.

22% of respondents saw greater domestic competition as one of the biggest challenges facing their business. This compares to 32% who named reduced consumer spending (or spending on premium goods) as the biggest challenge.

In terms of prospects, 52% said that the increasing emphasis on health and wellness presented a significant opportunity. 25% identified the fair trade and free range markets as providing significant opportunities, while 23% said the same about green consumer and local produce.

Nordmilch, Germany’s largest dairy group, is close to merging with fellow co-operative Humana Milchindustrie. The two German dairy co-operatives have already bundled their sales activities together to form Nord-Contor Milch.

Rolf Janshen (left), chief director of Humana Milchindustrie, and Dr Josef Schwaiger, chief executive of Nordmilch.

The boards of management and supervisory boards of Nordmilch and Humana Milchindustrie have now proposed a full merger. However, the proposal requires the consent of the members of both co-operatives and of the German Federal Cartel Office. The representatives of the co-operatives’ farmer members will be informed of the merger details at their annual assemblies and the final decision will then be passed at extraordinary assemblies no later than the end of the year.

“A comparison of the development of the dairy industry in Germany with that in neighbouring European countries clearly reveals that Germany needs further consolidation to survive in international competition in the long term,” says Dr Josef Schwaiger, chief executive of Nordmilch.