DENMARK – Arla Foods, a Denmark-based dairy giant, is in discussions to acquire the Semper facility in Götene, Sweden, from Hero Group.
The facility, which produces gruel, infant formula, and gluten-free mixes, is set to be closed by Hero Group due to changing market conditions, including a decline in baby milk consumption, reduced demand from China, and a lower birth rate.
Arla Foods already has a cheese and spreadable butter factory in Götene, next to the Semper site, and the two companies share facilities.
Arla is interested in acquiring the factory buildings, parts of the equipment, and the land itself. The acquisition would enable Arla to enhance its production capacity for milk powder, particularly for industrial markets.
According to a Hero Group spokesperson, the decision to cease production at the Götene plant is driven by lower-than-expected production due to changing market forces and strategic focus.
The company aims to prioritize a smaller number of core categories.
Jim Frandsen, General Manager of Hero’s northern European business, stated that talks with unions have been initiated due to the need for operational efficiency and competitiveness amid lower production levels at the Götene plant.
Marika Lifbom, Manager of Arla’s Dairy in Götene, highlighted Arla’s interest in acquiring the equipment needed to produce milk powder for industrial markets.
The acquisition aligns with Arla’s strategy to utilize surplus milk and increase production capacity for powdered milk.
Arla Foods currently operates two powdered milk facilities in Sweden and exports the product to markets including the Middle East and China.
“In Sweden, as well in other European countries we have a surplus of milk, (…) we export it. So, with another powder facility, we would be able to increase our capacity to produce powder,” the company’s spokesman said.
The acquisition of the Semper facility would provide Arla with additional capabilities, enhancing its operations within the powdered milk production sector.
The employees at Arla and Semper have been informed of the plans, and negotiations with union officials have commenced.
The acquisition, if successful, would further strengthen Arla’s position in the dairy industry and contribute to its strategic growth objectives.
Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE
