Arla acquires Mondeléz’s Kraft cheese business in the Middle East

European dairy giant Arla Foods has reached a deal with American brand Mondeléz to acquire its processed cheese business in the Middle East and North Africa, licensed under the Kraft brand.

The transfer gives Arla full ownership of a 66,000-tonne-a-year cheese production plant in Bahrain and the opportunity to further expand in the region, according to the announcement.

Arla, which owns the Puck, Lurpak and UHT Milk brands, said it had more than doubled its MENA sales since 2010, making the region its largest market outside Europe.

The company expects its retail and foodservice sales in MENA to reach EUR560m ($637.1m) this year.

“This acquisition is a game changer for our MENA business. We have an established and growing business in the Middle East and know our consumers and customers well in this part of the world,” said Arla CEO Peder Tuborgh.

“As such, this deal is an excellent strategic fit for us as it enables us to both expand our branded presence in the cheese category and secure the local production capacity we have been looking for to continue to grow our business.”

The company previously shipped products manufactured in Europe to the region after maximising local production capacity in Riyadh.

“Over time, the site in Bahrain will also allow us to base the production on high-quality milk from our farmer owners in Europe,” said Arla international business executive vice president Tim Ørting Jørgensen

The production site is located in Manama, Bahrain and has a capacity of more than 66,000 tons. It was constructed in 2008 and has won many awards for manufacturing excellence in the cheese industry.

The deal is expected to close by the end of May 2019.

In April, Mondeléz opened a $90m factory for Oreo cookies in Bahrain.

Read: Mondelēz opens $90m Oreo factory in Bahrain