September 1, 2015

 

​Two new Arla joint-ventures in West Africa

 

 

 

Continuing its expansion in Africa, Arla is now taking its next steps in West Africa with the announcement of two new joint venture companies in Senegal and Nigeria.

 

Its local partners, Tolaram (Nigeria) and Attieh Group (Senegal), will provide the distribution backbone that will help Arla to expand its business in the region.

 

The development is part of Arla's strategy to create new markets outside the EU, ensuring that the company can create more value from farmer-owners' milk.

 

Within sub-Saharan Africa, Arla aims to grow its annual revenue from approximately US$102 million to about US$519.1 million in 2020. This is to be achieved initially through sales of powdered and liquid milk, which is in high demand among the rapidly growing middle class in and around major cities.

 

"With the improved living standards, families are increasingly demanding safe and affordable nutrition. West Africa faces a milk deficit, which gives Arla an opportunity to provide milk powder and other dairy products that meet the consumers' needs," said Steen Hadsbjerg, the head of Arla's business region in sub-Saharan Africa.

 

"We are here to build a long-term business, and that requires strong local partners. We are therefore pleased to join two experienced partners in Senegal and Nigeria."

 

Arla's powdered milk products in Africa are sold under the Arla Dano^® brand.

 

In Nigeria, Arla has an established business with an annual revenue of about US$90.3 million. However, so far, profits are based on various distribution agreements.

 

By placing all its current and future business in the new joint venture company with Tolaram Group, Arla expects to grow its revenue to US$271 million by 2020.

 

"Nigeria is one of the biggest markets for dairy products in Africa. For Arla to succeed in Africa, we must succeed in Nigeria," said Hadsbjerg. "The population is growing at a rate of two to three per cent per year, and people are young, ambitious and increasingly well-educated. This makes Nigeria a perfect market for Arla's Africa strategy, and we expect the new joint venture to start up its sales in the market in September."

 

The new joint venture in Nigeria will bear the name "TG Arla Dairy Products LFTZ Entreprise", with ownership equally shared between Arla Foods and Tolaram Group. The latter will handle packaging, marketing, sales and distribution of Arla products in Nigeria. Mads Burmester has been appointed as managing director of the company.

 

Currently, Arla does not have any sales in Senegal, but through a joint venture company with the Attieh Group, Arla expects to build an annual revenue of US$36.1 million by 2020.

 

The new joint venture company in Senegal is called Arla Senegal S.A. and is owned 75% by Arla Foods and 25% by Attieh Group. The joint venture will handle packaging, marketing, sales and distribution of Arla products in Senegal, and is expected to be operational before the end of this year.

 

As Arla Foods continues to expand its presence in African markets, the company believes that growth must be achieved in a responsible manner, devoid of unintentional consequences for the local farming industry and its related communities.

 

For that reason, Arla has conducted an in-depth analysis called "Assessment of the Potential for Human Rights Impact related to the Market Effects of Milk Powder Export".

 

Arla is also introducing due diligence procedures complying with the UNGPs and the OECD guidelines, ensuring that the company is well placed to manage human rights impacts of its global business activities in accordance with international guidelines.