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Europe: The Emergence of Stonyfield Farm
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Stonyfield
Farm, the world’s largest organic yoghurt producer, is building a
platform for European expansion by investing in an Irish dairy. It
has acquired a 37% stake in Glenisk via its newly formed subsidiary,
Stonyfield Europe.
The subsidiary
is majority owned by the multinational Danone, which also has 80%
equity in Stonyfield Farm. The French company took majority control
of New Hampshire-based Stonyfield Farm two years ago after an
initial 40% investment in 2001. |
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The new
company is looking to emulate the success of Stonyfield Farm in the
North American market. Reporting US $211 million sales in 2005,
Stonyfield Farm is one of the largest organic food companies in the
world. It dominates the American organic yoghurts market with over 80%
market share.
Stonyfield
Europe’s investment in Glenisk may come as a surprise considering it is
a small family-owned dairy. Although Glenisk is the leading organic
dairy in Ireland, it uses a fraction of the organic milk used by British
dairies. It also has no presence outside its home market.
Stonyfield Farm is
believed to have targeted Glenisk for two reasons. By acquiring the
Irish organic dairy, it has secured organic milk supply for yoghurt
production. The UK market, the target of Stonyfield’s expansion plans,
is experiencing organic milk undersupply. Supply shortages are leading
one leading supermarket to source organic milk from Northern Ireland.
Glenisk also
brings expertise in the organic sector to Stonyfield Farm which has
little knowledge of the European market. Danone, although a multinational
food company, has limited experience in marketing organic dairy
products.
Stonyfield Farm
may have secured organic milk supply by this investment, however
building a strong market position will prove a greater challenge. Large
dairies like Arla Foods and Campina Melkunie already
dominate the European market for organic dairy products. Finding market
openings may prove difficult considering supply chains are
well-established.
The UK organic yoghurts market, a major part of Stonyfield’s plans, will
be a tough market to crack. Established brands like Yeo Valley Organic
and Rachel’s Organic as well as supermarket
private labels crowd shelf-space in retailers. Indeed, stiff competition
led Müller, the leading brand of conventional yoghurt, to withdraw
within a year of its market entry. Like many other companies, Müller
learned that multi-million euro product launches are no guarantee of
success in the organic food industry.
Related Reports:
#1201-55 The
UK Market for Value-Added Milk
#1202-43 The UK Market for Organic Dairy Products
Posted: June 20th 2006
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