Arla and DMK Group Unite to Create Europe's Largest Dairy Firm

The dairy company Arla has announced a merger with the German giant DMK Group, positioning the new entity as the largest dairy operation in Europe.

This merger is expected to benefit Swedish milk producers, according to industry leaders. The combined organization will encompass around 12,000 dairy farmers and is projected to generate a revenue of EUR19 billion, equivalent to over 200 billion Swedish kronor.

Previously, Arla and DMK had collaborated to some extent, but this marks a significant step towards a full merger. The headquarters of the new company will be situated in Viby, Denmark, with Peder Tuborgh appointed as the chief executive officer.

Inger-Lise Sjöström, vice-chair of Arla's board, emphasized the importance of this merger in an increasingly volatile market, where a decline in milk production across Europe poses challenges. She noted that the partnership will strengthen their position and ensure food production continuity.

Sjöström highlighted the complementary strengths of both companies, suggesting that this merger could lead to higher prices for Swedish dairy farmers in the long run. Arla is recognized for its strong branding and robust export business, while DMK excels in cheese production, enhancing the value of whey byproducts.

It is important to note that the merger will not result in German milk being packaged in Swedish products. Sjöström clarified that the milk will retain its national identity.

Palle Borgström, president of the Swedish Farmers' Union (LRF), expressed optimism about the merger, stating that it will benefit both Arla and Swedish dairy producers. He pointed out the significant global demand for dairy products, particularly outside of Europe, which the merger will help meet.

Borgström dismissed concerns regarding the integration of the two cooperatives, as both are founded on principles that ensure equal conditions for members regardless of their country. He believes this consolidation will create greater investment opportunities and increase milk production capabilities in Sweden.

The merger is now subject to approval from the representatives of both cooperatives and the respective regulatory authorities.