Groupe Danone has created a European dairy organic subsidiary called Stonyfield Europe branching from the company's 80%-owned US organic yoghurt firm Stonyfield Farm.

The newly formed company has immediately entered into the growing European organic market by purchasing a 37% interest in Ireland's top organic dairy manufacturer, Glenisk.

Stonyfield Europe will be headed by Stonyfield Farm's chairman and CEO Gary Hirshberg, and operate as an independent unit within Danone's portfolio.

Hirshberg said: "I am particularly proud that our first initiative in Europe has been an investment in Glenisk, a company that is a pacesetter for organic food in Europe. Our aim in this is to help Glenisk beef up capacity and find new sales openings. It is also a first step in the process of Stonyfield Europe's own development."

Glenisk reported sales growth of over 10% in 2005. The Cleary family, which will hold 63% of equity, will continue to manage the business.

Stonyfield Farm, which is the fourth largest yoghurt producer in the US, posted sales of approximately EUR200m in 2005. Danone acquired a 40% interest in the company during 2001, before raising its stake to 80% in 2004.

Groupe Danone chairman and CEO Franck Riboud said: "The European market for organic dairy products is growing but it remains a fairly discreet presence. With Stonyfield Europe, we hope to capitalise on the success and unique expertise of Stonyfield Farm to speed up its development."