October 2, 2012

China's Biostime International chooses Arla to supply milk powder

China's Biostime International Holdings Limited chose Arla to supply milk powder produced from Danish milk in June 2012.

The order is for about 20,000 tonnes a year for the next 10 years and involves an investment of about DKK165 million (US$28.6 million) to expand Arla's Arinco milk powder facility in Denmark, of which Biostime will finance half.

Arla's Board of Directors has now approved the investment in Arinco, and expansion will be under way from as early as October.

"We expect that this increased production for the Chinese market will create about 30 new jobs at our facility between now and 2014. The investment also means that we can introduce more automated processes and thus make production at Arinco even more efficient. So we will produce more, and in a more efficient manner," says Mogens Bøgh Pedersen, Arinco site director.

Arla already exports very refined milk powder and infant nutrition products to China and the high quality of the Scandinavian products was one of the main reasons that Arla was chosen as supplier.

"We are proud to supply the Chinese market with our high-quality Scandinavian products, which have an excellent food safety record. The agreement rubber-stamps Arla's outstanding skills in producing dairy products, and the agreement is a good one for us because these products are at the more profitable end of our product range," says Senior Vice President Frede Juulsen, who is responsible for Arla's business in China and globally responsible for milk powder in Arla.

The contract with Biostime came in the wake of Arla's strategic agreement with the leading Chinese food company, COFCO, on joint ownership of China's largest dairy company, Mengniu Dairy Group. The agreements are intended to strengthen Arla's presence and long-term profitability in the Chinese market, which defines as a strategic growth market in the Arla Group strategy.