European dairy co-operative Arla Foods has announced plans to sell its cheese production site in Sonthofen, Germany, to local dairy company Allgäuer Hof-Milch.
Arla says that it is taking this step as the production and distribution of the speciality cheese made in Sonthofen is no longer part of the group's 'strategic orientation' in Germany and Europe.
"All of our production sites in Germany are focused on supplying both the German market and our export markets, playing a crucial role in our delivery of the Arla Group strategy," said Peter Giørtz-Carlsen, Arla Foods' head of Europe.
"However, since the site in Sonthofen no longer corresponds with our overall strategic aim, we are pleased to have found a suitable buyer to continue its production and legacy."
Financial details of the deal, which is expected to be finalised before 1 May 2018, were not disclosed.
Although the Sonthofen factory is set to be acquired by Allgäuer Hof-Milch within the next month, Arla says that it will continue to supply the milk for cheese production at the facility until the end of 2018, due to contracts with local farmers.
Additionally, Allgäuer Hof-Milch will continue to produce cheese products for Arla until further notice, so that the co-operative can comply with current retail contracts.
Last month, Arla Foods announced that group revenue increased by 8.1% to €10.3 billion in 2017, driven by higher sales prices, increased branded sales, and a better geographical and product mix.
The dairy group also revealed plans to invest over €500 million in its operation in 2018, focussing on larger and improved production capacities, as well as new technologies.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.