Denmark's Arla buys Mondelez's Kraft business in the Middle East

Acquisition gives Arla full ownership of cheese production factory in Bahrain

Arla agreed to acquire Mondelez International's Kraft cheese business in the Middle East. AP

Mondelez International sold its Kraft-branded cheese business in the Middle East to Danish food producer Arla Foods for an undisclosed sum.

“This acquisition is a gamechanger for our Mena business,” Peder Tuborgh, chief executive of Arla, said in a statement on Thursday. “It is an excellent strategic fit as it enables us to expand our branded presence in the cheese category, and secure the local production capacity we have been looking for to continue growing our business.”

The deal is intended to strengthen Arla’s market position in the Middle East and North Africa (Mena) region, giving it access to new product categories and manufacturing sites. Under the deal, which is expected to complete by end of May 2019, Arla will acquire full ownership of the Mondelez cheese production site in Bahrain, which produces a range of Kraft products and has the potential to expand its size.

The whole of the Mondeléz processed cheese business in the Middle East is licensed under the Kraft brand, which is owned by Kraft Foods Group, part of the Kraft Heinz Company based in Chicago.

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Arla is a cooperative owned by its dairy farmers in Europe. The Mena region is its second largest market and named as one of the regions with the biggest growth potential in Arla’s Good Growth 2020 strategy.

Arla distributes butter under the Puck and Lurpak brands and milk powder and UHT milk under Dano and Arla in the Mena region.

The company has more than doubled its sales in the Mena market since 2010, and expects its retail and food service sales in the region to reach approximately 560 million euros in 2018.

“We have an established and growing business in the Middle East and know our consumers and customers well in this part of the world,” Mr Tuborgh added.