Yeo Valley Dairies, a subsidiary of Yeo Valley Group, has been acquired by Arla Foods, providing farmer-owned companies to brand their dairy products under Yeo Valley.
Commenting on the deal, Tomas Pietrangeli, Managing Director, Arla Foods Limited said: "The potential for future investment in range through this licensing agreement with Yeo Valley provides a significant opportunity to offer a greater choice to consumers at attractive prices.Our ambition is to encourage customers to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories.”
With a quarter of households purchasing organic products, there is an opening for the dairy sector to convert more customers from standard to organic dairy. To fuel this growth and meet the growing needs of consumers, it requires a large investment in both innovation and range which the acquisition Yeo Valley brand and Arla brand aims to achieve.
Pietrangeli continues: “Arla Organic Free Range milk has driven 60 percent of all the growth within the organic milk category in the last 12 months, with 70 percent of all Arla Organic Free Range milk sales attributable to customers who would have not previously purchased organic milk.Through the licence to use the Yeo Valley brand, we believe that we can further drive organic penetration of the milk market.”
The announcement is a milestone in the journey of Yeo Valley and organic dairy in the UK. Tim Mead, organic farmer and custodian of the family business comments: “Arla’s farmer-owned credentials are aligned to the values and ethos that the Yeo Valley brand is based on – “Supporting British Family Farms”.We have a long-held ambition to grow organic dairy in the UK, because at Yeo Valley, we believe that organic dairy is better for the planet, for the cows and for health.”
Currently in the UK, only four percent of consumers drink organic milk which compares with 10 percent in Germany, 16 percent in Sweden and 29 percent in Denmark.
“This is a great chance for us to catch up with our European neighbours” said Tim Pietrangeli continues: “Organic milk has a key role to play as consumers increasingly look for ways to make their diets healthier. Its production without the use of artificial or manufactured herbicides and fertilisers and with high standards of animal welfare are key reasons it is in growth, especially with younger consumers. Arla is working with industry bodies to continue to help consumers understand the additional benefits that come with organic milk."
Yeo Valley, which remains independently owned by the Mead family, will maintain its focus on strengthening its core business of yogurt, desserts and ice cream.
Completion of the transaction will take place following merger approval by the UK Competition and Markets Authority.