US dairy group HP Hood has snapped up a plant from Dairy Farmers of America that, before it had been acquired by the co-op, had been the hub of a failed venture between German yogurt giant Muller and PepsiCo.
HP Hood has pledged to invest more than US$200m “over several years” at the facility in New York state that Dairy Farmers of America bought in December 2015 after Muller and PepsiCo ended their venture.
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Dairy Farmers of America never used the plant. Rick Smith, the cooperative’s president and CEO, said: “We originally made a strategic decision to purchase this plant, as it’s in an important milk shed for the industry and this area. Our primary goal was to ensure that this facility remained active in dairy for the long term. We explored opportunities with more than a dozen dairy companies and think HP Hood is a great fit to serve the local milk shed and community.”
HP Hood plans to repurpose the idle plant to manufacture extended-shelf-life drinks. It also plans to build a warehouse. Construction is set to start this summer, with HP Hood looking to begin operating by the second quarter of 2019.
The company has four other manufacturing locations in New York state, which manufacture fluid and cultured dairy products such as milk, cream, cottage cheese and sour cream.
John Kaneb, the president and CEO of HP Hood, said: “We are fortunate that our need for more capacity coincided with an opportunity to expand our capabilities in the great state of New York.”
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By GlobalDataMuller and PepsiCo launched their Muller Quaker Dairy venture in 2012 and started selling products under the German group’s namesake brand. However, the joint venture entered the category at a time of intensifying promotional activity and slowing growth.
In December 2015, when Muller and PepsiCo announced their decision to end the venture, Ronald Kers, the then CEO of the German business, said feedback from customers had been “very positive” but admitted the operation had failed to develop “in line with our expectations” due to “extremely challenging market conditions”.
