Arla Foods and Egypt’s largest diary company, Juhayna Food Industries, have formed the joint venture, Ar Ju Food Industries. Under the agreement, Juhayna will own a 51% stake in the new venture, but Arla will manage the business.
Juhayna is one of Egypt’s top producers of UHT milk, yogurt and juice, while Arla will use Johayna’s nationwide distribution network through which to sell its own European butter, cheese and cream beginning in October 2015, in a deal that will strengthen and expand the product portfolios of both businesses.
The Egyptian diary sector is forecast to grow to US$4.77 billion by 2019 according to Euromonitor, as consumer wealth in the country grows and more people turn away from homemade dairy foods to processed products. However, the country has a limited number of retail supermarket outlets making distribution by foreign producers complicated.
This partnership with Johayna will help Arla bypass these hurdles, enabling the company to reach “all corners of Egypt” according to Rasmus Malmbek Kjeldsen, senior director for the Middle East and Africa, Arla Foods.
Arla has long been maneuvering to gain a foothold in the promising Egyptian market. In September 2014 it offered a non-binding bid of US$8.51 per share in an attempt to acquire the Egyptian cheese maker, Arab Dairy, but after a period of due diligence decided to retract its offer. Pioneers Holding went on to outbid rivals to acquire the business.
To receive relevant news stories with summaries provided by GAI News, subscribe to daily or weekly service.