US/SAUDI: Mead Johnson, Almarai to form Gulf venture

By: just-food.com | 30 March 2010

Venture "to be profitable" by 2012

US baby-food group Mead Johnson is to set up a pediatric nutrition venture to serve the Gulf with Saudi dairy firm Almarai.

Both companies will hold a 50% stake in the venture, which will sell brands co-marketed under Mead's Enfa and Almarai's namesake brands in the Gulf Co-operation Council (GCC) states.

Almarai is building a manufacturing facility for pediatric nutrition products just outside Riyadh, the Saudi capital. The site is scheduled to be commissioned during 2011 and will be leased by the venture.

A management team, sourced from both parent companies, will oversee the facility and run the business on a day-to-day basis, reporting to the venture's board, which will also be composed of representatives from both companies.

Almarai CEO Abdulrahman Al Fadley said the manufacturing plant would leave the venture partners well placed to grow the business.

"With the first manufacturing facility for infant formula products in the region, we believe that we are in the ideal position to create lasting and positive relationships with business partners, health care professionals and consumers throughout the Gulf region, and we look forward to building and growing this business with Mead Johnson in the coming years," Al Fadley said.

It is anticipated that the joint venture will turn profitable during 2012.

Mead Johnson president and CEO Steve Golsby said the venture was an "unbeatable combination" that will create "a win-win-win situation benefitting not only both companies, but also the people and communities of the GCC."

Golsby added: "This venture offers us a great entry point into the GCC, a market we had prioritised because of its size and attractive demographics - with strong birth rates, above-average income levels and excellent potential for growth. We see this as a tremendous opportunity to enhance nutritional offerings and increase consumer choice in the region."

Sectors: Baby food, Dairy, Emerging markets