TINE deal boosts Arla's whey protein concentrate supply
through an agreement with Norwegian dairy firm TINE, under which it
will sell WPC produced as a by-product of TINE's cheese production.
TINE has previously sold the whey generated by its cheese operations as animal feed.
Now, however, it is investing NKR 300m (€30m) in a new plant to refine it into WPC for the food and nutrition industry, which commands a higher price.
For Arla, which will be selling the TINE's ingredient to food industry customers outside Europe, this means a ten per cent increase in the WPC it can offer to the market - thus helping it step up to global demand for dairy ingredients.
A spokesperson for Danish Arla told FoodNavigator.com that the milk powder and the protein concentrate market is booming.
"WPC is a product in great demand," he said, and explained that increasing demand is coming from developing markets like China, India, Brazil and Russia where more affluent consumers are switching their eating habits towards more Western-style products.
This includes a demand for all kinds of dairy products.
Coupled with this, there is also a shortage in whey protein concentrates as a result of bad weather in two of the producing countries, Australia and Argentina (drought and flooding respectively).
This factor is means there is a need to establish "a new balance between supply and demand" - and Arla is positioning to step into the breach.
The spokesperson said that Arla will not be able to sell TINE's WPC in Europe for competition restrictions.
However the arrangement will indirectly boost supply to Europe since the company can divert some of its own material that it presently sells elsewhere to the continent.
He declined to give specific figures for Arla's current WPC capacity.
The TINE material will be no different from Arla's own-produced WPC.
It will be sold through existing sales channels to customers in the nutrition industry, such as infant formula, and the broader food marker for use in products like ice cream, cheese, meat and bakery products.
While Arla is not contributing to TINE's new plant in financial terms, a spokesperson told FoodNavigator.com that it will be providing know-how on the technical set-up.
There is no fixed time limit to the contract between the two companies.
In November Arla announced another move in the whey market outside of Europe, with the investment of US$20m (€13.4m) in upgrading technology at its Portena plant in Argentina.
It said the upgrade will result in greater cost efficiency in producing whey protein powders from leftover dairy waste called permeat.
