Arla has acquired Mondeléz’s processed cheese business in the Middle East region, which is currently licensed under the Kraft brand.
The acquisition gives Arla full ownership of a cheese production site in Bahrain, which will provide the company with the opportunity to further expand its branded cheese production in the region.
Located in Manama, the facility was built in 2008 an includes an on-site innovation pilot plant.
Denmark-headquartered Arla said the Middle East and North Africa (MENA) region is one of the key geographical areas in its Good Growth 2020 strategy.
Since 2010, Arla has more than doubled its sales in MENA, which is the company’s largest market outside Europe, through strong positions in cheese under the Puck brand, butter under the Lurpak brand as well as milk powder and UHT milk under the Dano and Arla brands.
The company expects its retail and foodservice sales in MENA to reach approximately €560 million this year.
Arla CEO Peder Tuborgh said: “This acquisition is a gamechanger for our MENA business. We have an established and growing business in the Middle East and know our consumers and customers well in this part of the world.
“As such, this deal is an excellent strategic fit for us as it enables us to both expand our branded presence in the cheese category and secure the local production capacity we have been looking for to continue to grow our business.”
Until now, most of Arla’s products sold in the MENA region have been made in Europe, with some local production also placed in Riyadh, Saudi Arabia.
The company said that the deal will deliver much-needed capacity and provide a strong regional supply chain footprint to secure long-term competitiveness.
Commenting on the deal, executive vice president of Arla’s international business, Tim Ørting Jørgensen, said: “By expanding our branded portfolio and local supply chain in one go, we will be able to bring new commercial opportunities to our customers quicker and better. Over time, the site in Bahrain will also allow us to base the production on high-quality milk from our farmer-owners in Europe.”
It is expected that the acquisition will be completed by the end of May 2019.
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The snacks giant says the acquisition will help build on its commitment to “lead the future of snacking” in key geographies worldwide. Once the transaction is completed, Mondelēz will continue to operate the Clif Bar business from its headquarters in Emeryville, California. The snack giant will also continue to manufacture Clif Bars’ products, which include Clif Bar, Luna and Clif Kid, at its facilities in Idaho and Indiana.