Dairy company Arla Foods has announced that it has plans to build a DKr1m (US$113.6m) high-technology plant in Denmark early in 2002, the final decision on which will be made by the firm's management in September or October this year.

The Danish-Swedish group revealed that the new plant would focus on the production of sugar extracted from milk, to create a product called tagatose that will be suitable for diabetics. Tagatose can be used as normal sugar but has 3 times fewer calories. It was recognised as GRAS (generally recognised as safe) in mid-April by US authorities.

This product, said the company, would enable revenues to grow sharply once Arla has secured the patent for its manufacture.

Final investment decisions will be made later this year, when an investment partner is secured. The new factory will probably in Western Jutland, where Arla already owns one plant.

Recently Arla also decided to build a protein factory in Argentina with local dairy company SanCor, at a cost of DKr800m. The company has also signed a contract with the German dairy Meierei Trittau e.G. to deliver organic milk in East Germany.