European dairy giant Arla Foods has reached an agreement with US-based Mondelez International to acquire its processed cheese business in the Middle East region, which is currently licensed under the Kraft brand.
The acquisition also gives Arla full ownership of a cheese production site in Bahrain, which provides Arla with the opportunity to further expand the company’s branded cheese production in the region, a statement said.
Arla said that since 2010 it has more than doubled its sales organically across the Middle East & North Africa (MENA), which is the company’s largest market outside Europe.
The company said it expects its retail and foodservice sales in MENA to reach EUR560 million this year.
“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,” said Arla CEO Peder Tuborgh.
Until now, most of Arla’s products sold in the MENA region have been produced in Europe, with some local production also placed in Riyadh, Saudi Arabia.
However, with Arla’s capacity nearly maximized for processed cheese, the new deal delivers much-needed capacity, he added.
The production site is located in Manama, Bahrain and has a capacity exceeding 66,000 tons. Built in 2008, it includes an on-site innovation pilot plant and has won multiple awards for manufacturing excellence within core cheese categories.
The deal is expected to take effect by end of May 2019.
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