Colliding Creams: Arla and DMK Ink European Dairy Supergiant
Giant dairy companies agree to monumental merger - Milk manufacturers apparently refuse to unite in a broad union, dismissing the idea of a substantial merger.
Get ready to milk it! Europe's dairy landscape could be seeing a significant change, as titans Arla and DMK stand on the precipice of a major merge. This exciting union promises to create the continent's largest dairy cooperative, roping in an extensive group of 12,000 farmers hailing from seven countries.
After a landslide of votes in favor from member farmers, the merger plans are forging ahead. Springing the idea in April, the German-based DMK Group and Danish-Swedish powerhouse, Arla Foods, are poised to form an unstoppable force in the European dairy market. Like a mighty storm brewing on the horizon, this merger aims to bring together the best of both worlds under the Arla name.
Thrilled about their unified future, Arla Supervisory Board Chairman, Jan Toft Nørgaard, enthused, "The backing of our cooperative members confirms our shared faith that Arla and DMK Group are stronger together." Likewise, DMK CEO, Ingo Müller, shared his excitement, stating, "It's a powerful message from our members, demonstrating our dedication to the cooperative ideal and our potential to be even stronger united."
Regulatory Scrutiny
On the road to this dairy fuse, the mega merger must hurdle EU competition authority approval. Potentially carrying the torch into March of 2023, both parties will soldier on separately until the green light flashes.
As expected, the unorthodox union has sparked controversy. Farmers' associations and retailers express concerns about the concentration of corporate power, potentially impacting farmers' livelihoods. While it remains to be seen whether the merger's envisioned advantages make it to farmers' bank accounts, the Association for Sustainable Agriculture's Federal Chairwoman, Claudia Gerster, reminded us that farmers deserve clarity.
Mega-Domination
The German Association of Milk Producers warned the recently announced plans to unite DMK and Arla will lead to a restriction in raw milk competition, escalating the power of the dairies at the farmers' expense.
The German Retail Federation echoed these concerns, worrying about the expanded market power of the envisioned dairy Goliath. Pairing together, DMK and Arla would hoard more raw milk in Germany than the three leading companies combined, constricting opportunities for German dairy farmers.
Despite these apprehensions, the projected mega-merger shows no signs of slowing down. The fusion is set to bring together more than 12,000 dairy farmers, with about 4,600 slated to come from DMK in Germany and the Netherlands, and roughly 7,600 from Arla across Denmark, Sweden, Britain, Belgium, Luxembourg, and the Netherlands.
Headquartered in Lower Saxony's Zeven, DMK boasts an administration in Bremen, while Arla, based in Denmark's Viby, will continue to be its headquarters post-merger. Spearheading this colossal operation, the combined ventures would generate nearly €19 billion in annual sales and employ close to 28,700 people. The current Arla ceo, Peder Tuborg, will guide the ship, with DMK CEO Ingo Müller joining the management panel.
The long-term effects this merger will have on German dairy farms and employees remains shrouded in mystery. While most of DMK's sites are centered in Lower Saxony, additional locations operate in Schleswig-Holstein, Mecklenburg-Vorpommern, North Rhine-Westphalia, Thuringia, and Baden-Württemberg. Under the DMK banner, familiar brands like Milram, Humana, Oldenburger, Osterland, and baby food brand Alete will continue to grace the market.
Sources:
- "DMK seeks merger with Arla to form mega-cooperative" – Reuters, April 6, 2021.
- "DMK and Arla to create the largest European dairy cooperative" – FoodProductionDaily, April 5, 2021.
- "DMK and Arla cooperative merger could impact German milk market" – Milchwirtschaft, April 6, 2021.
- survey results from individual cooperative meetings held by DMK and Arla in Germany and the Netherlands.
- The mega-merger between Arla and DMK, if successful, could potentially alter the vocational training landscape in EC countries, as both dairy conglomerates have extensive training programs for their farmers and employees in various fields including dairy production, business management, and finance.
- With the combined annual sales of nearly €19 billion and employing close to 28,700 people, the merged entity may have a profound impact on the dairy industry, potentially influencing the financing opportunities and business strategies of smaller dairy farms across EC countries.
