Arla to establish Russian JV for butter, cheese
distribution partner Artis, which will allow it to better tap
opportunities in the country's growing cheese and butter market.
Artis has distributed Arla's cheese and butter products in Russia for the past decade, and it has enjoyed particular success in and around its home city of St Petersburg.
But with the new joint venture the companies are to planning expansion for Arla's branded products into Moscow and other Russian cities.
Products intended to become available through all Russian retailers include yellow cheese, blue cheese, cream cheese and butter.
Russia has a strong tradition of dairy product consumption, particularly butter and cheese.
As the country's economy improves and consumers have more disposable incomes, they are increasingly attracted by Western brands which represent new product concepts and may contain value-added ingredients.
According to Arla, the Russian retail butter market sees sales over 200,000 tons, of which a quarter are value added.
The yellow cheese market accounts for 100,000 tons, of which 40 per cent are value added.
The specialty cheese market currently stands at 30,000 tons.
"We believe that our shared competencies provide the right growth vehicles as they will enable us to create the distribution required to initiate stronger marketing campaigns and thereby establish and grow Arla Foods within key dairy categories," said Finn Hansen, head of Arla's overseas division.
The JV, which is subject to approval by the Russian authorities, will be 75 per cent owned by Arla.
The remaining 25 percent will be held by Artis owner Mikhail Lyasko, who will also become managing director of Arla Foods Artis Ltd.
The news on the Russian JV comes in a week in which Arla has reported significant news in other of its key markets.
Today the company said it had purchased the remaining shares in its UK subsidiary Arla Foods UK Ltd, buying out its former JV partner Express Dairies.
The move is expected to make it easier for Arla to access the UK market - its strongest - with its global brands.
The subsidiary is now part of Arla Foods Consumer Group UK.
Following a dramatic 2006 in Lebabon, where Arla only recently entered into a joint venture with local partner Kalassi, that was marked by bombing campaign and a consumer boycott, the company has reported that it is now 16 per cent above budget.
The positive trend is said to "more or less cover all product and all regions".
