Arla Foods supply deal secures Chinese product pipeline for infant formula firm

By Ben Bouckley

- Last updated on GMT

Related tags Infant formula Infant formula products Milk

Arla Foods supply deal secures Chinese product pipeline for infant formula firm
Arla Foods has signed a financing and supply agreement with signficant pediatric nutrition and baby care product producer Biostime International Holdings to supply the Hong Kong-listed company with infant formula. 

Arla Foods said that the 10-year agreement (signed last night) would secure Biostime sufficient production capacity (up to 20,000 tonnes of infant formula per annum from 2015) at the former's Arinco facility.

The company will pay Arla DKK81.5m - which equates to 50% of Arla's total planned investment for capacity expansion at its Arla Foods Arinco infant formula plant in Denmark - to install processing and packaging equipment specific to Biostime's needs.

Through this financing, Biostime gains rights to specified volumes of infant formula products from Arla (with a maximum volume of up to 20,000 tonnes per year from 2015) and repayment of the financing by Arla within five years - via a price deduction (a fixed amount per kg) of infant formula supplied by Arla to Biostime.

Biostime is also obliged to purchase infant formula products from Arla Foods at a specified minimum purchase volume for each year during the 10-year term of the financing and supply agreement.

The Arla Foods Arinco plant in Videbaek (pictured below) is the firm's largest infant formula production site in Denmark, is equipped with full formula spray-dry technology and uses Danish milk from the firm's farmers.

Arala Foods Arinco

Jens Jorgen Hjortshoj, vice president of Arla Food's B-to-B Nutrition Business Unit, said: “We are very pleased to sign this 10-years cooperation agreement with Biostime. This new cooperation will have a positive contribution into Arla’s business by enabling our company to produce high-quality dairy products with superior added value."

He added: "This partnership with Biostime, a leading player in China’s premium infant nutrition market, clearly reinforces our confidence in the long-term development of the Chinese premium infant formula market.”

The commercial agreement means that Arla is now Biostime's third European supplier in the infant formula field,  where the firm signalled its intent to expand its business by co-operating with upstream suppliers as early as December 2010.

It said today in a statement that "the co-operation with Arla Foods can further enhance and secure the supply of premium quality infant formula products".

"The directors believe that this will also optimise the procurement costs of the company by economies of scale,"​ the firm added.

Related news

Related products

4 reasons children need MFGM, according to science

4 reasons children need MFGM, according to science

Content provided by Valio | 29-Sep-2023 | White Paper

In this white paper, Dr Anu Turpeinen discusses the ample scientific evidence showing why milk fat globule membrane (MFGM) is essential for children’s...

Introducing a new era in infant nutrition

Introducing a new era in infant nutrition

Content provided by dsm-firmenich | 01-Sep-2023 | Research Study

Omega-3s are critical to infant health and development – but conventional omega-3 ingredients are impacting the planet.

Solutions of Amino Acids-Based Infant Formula

Solutions of Amino Acids-Based Infant Formula

Content provided by INNOBIO Corporation Limited | 22-Jun-2023 | White Paper

Many infants who are born with nutritional defects often need specifically developed infant formulas to maintain their growth and development. Amino acids-based...

LIPOFER™: a bioavailable and stable source of iron

LIPOFER™: a bioavailable and stable source of iron

Content provided by Lipofoods, a Lubrizol Company | 26-Apr-2023 | White Paper

Maintaining adequate iron levels is critical to maintaining a healthy body, with deficiencies being the cause of several health issues including anemia...

Follow us


View more