The European dairy company announced that it had signed a letter of intent with the US company to develop the whey stream coming from Green Meadows Foods’ newly opened cheese facility in Hull, Iowa.
The plan is for Green Meadows to provide high quality milk or whey raw materials while Arla will provide its product and process technology. In addition Arla will sell and market all products produced by the partnership.
Henrik Andersen, senior vice-president, Arla Foods, told FoodNavigator.com that it had been looking for an opportunity in the US for some time and the fact that Green Meadows is a young company, established in November last year, offered some advantages.
He said: “We can plan the whole layout and design of the plant with our partner.
“Sometimes if something is already built and doesn’t fit exactly the way you would like to operate, it is a problem to go in and make a lot of changes.
“We will have production in the US and this production will be approved as Grade A, so the products we are producing can be used in fresh dairy products in the US.”
He added that this is virtually impossible to do outside the US because of strict regulations and said it meant good market access for its dairy, nutrition, (mainly infant formula) and bakery segments.
Andersen said: “Applying our global whey concepts to the American market and establishing a local partnership will provide significant new opportunities for us.
“It is, in many ways, a natural step for Arla Foods, and it is a step we have been working hard for several years to make.
“The American market is approximately 50 per cent of the global whey protein market and we are now entering with a strong partner.”
Green Meadows’ cheese manufacturing facility has a start-up capacity to process 2.5m pounds of milk per day, which includes plans to accomplish an expansion capability to 5m pounds per day in the near future.
The intent of the partnership is that Arla will acquire 100 per cent of the whey processing assets in Green Meadows Foods, and Arla will operate this facility as an integral part of its global supply of highly specialized whey products.
It is expected that definitive agreements can be signed during the 2nd quarter 2009.
Arla recently announced a five-year strategy to increase the focus on the company’s whey protein business as well as emphasis on the US market.
It said that the partnership with Green Meadows would “solidify its position as a global market leader in whey and will provide a strong basis for further growth”.
Arla Foods recently announced its 2008 financial year end results reporting that net profit was €46m below budget as consumers look to cut their spending.
Peder Tuborgh, group chief executive officer, said that the reported total full year net profit of €75m reflected a number of factors linked to milk supply concerns and the wider global economic downturn.