Arla Foods' proposed sale of its packaging company, Danapak, reflects a growing trend within the European dairy sector of companies focussing exclusively on their core operations.
In the beginning, the company exclusively produced Lur branded staves for the butter casks. Later on, the company branched out into production of cardboard, plastic, cartons and flexible packaging.
While the Danish dairy industry has always been a major customer, Danapak has supplied its products to many other industrial companies over the years. In recent years, the plastic business was sold off while the flexibles business has joined the associated Danapak Flexible Group, which is owned by Danapak (40 per cent) and the Austrian Teich Group (60 per cent).
Today only Danapak cardboard and cartons remains.
During the 2003/04 financial year, Danapak was converted to a limited company under the name of Danapak Holding A/S - a wholly-owned company within the Arla Foods Group. Danapak's sales to Arla Foods account for less than 20 per cent of its turnover.
The decision to sell the company, which has a turnover of DKK 350 million €47m), mirrors the actions of other major European dairies in recent weeks. DMV International, the industrial ingredients division of Campina , is investing €57 million in its whey processing and food ingredient facilities in Veghel, the Netherlands as part of the group's overall strategy to concentrate on key sectors of the dairy industry.
The market for whey derivatives is very promising with annual growth rates of approximately 10 per cent. DMV International intends to develop specific whey derived ingredients for both the food and nutrition industries worldwide.
However, DMV International's facility in Uitgeest, the Netherlands will be closed as a result of re-structuring operations. Campina says that a total of 36 jobs of DMV staff will be affected.