Nkunzi deal approval lets Clover in at Woolies
bdlive.co.za - May 5th 2015, 08:43
The Competition Commission has approved Clover’s acquisition of Nkunzi Milkyway, the maker of Tropika juice and condensed milk.
This will allow SA’s biggest dairy distributor to manufacture and pack Ayrshire organic milk and dairy products, including lactose-free yoghurt, for Woolworths.
The commission had initially expressed concern over the effect of the deal on small farmers and employment.
Clover CEO Johann Vorster said the deal would cause no retrenchments as Clover was investing in production capacity and facility upgrades and would provide career scope within the wider group for employees.
Completion of Cielo Blu, a four-year capital investment project that tackled logistical and distribution inefficiencies by expanding and relocating infrastructure, has enabled Clover to become a more formidable dairy player.
The company was hamstrung by historical constraints, as statutory regulation caused it to have many inefficient facilities in the north of SA, while most milk production was in the coastal areas.
As a result, raw milk would be transported in specialised tankers to the highveld and processed into long-life milk.
The tanker would return to the milk sources, at the coast, empty.
After the end of its service tie-up with France’s Danone, Clover bought DairyBelle’s yoghurt and long-life milk businesses in January. This will allow it to tap into SA’s high-margin yoghurt market valued at R3.6bn and its R675m custard market.
Clover is launching a slew of new products including a so-called smart drink, which it calls an "on-the-go snack with added nutrients" — a joint venture with Futurelife.
"Ayrshire’s name in dairy has grown tremendously over the past two decades due to substantial and continued investment by Woolworths. Our view is that Ayrshire’s strong brand is closely aligned with that of Clover’s as it is synonymous with quality dairy products," Mr Vorster said.
The company said it would take over existing Nkunzi supply agreements with producers on the same terms and conditions, or renegotiate supply agreements on an individual basis with producers.
Rival listed player Rhodes Food Group is the exclusive provider of Ayrshire milk and cream in the Western and Eastern Cape.From DFM Publishers (Pty) Ltd
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