Blog: Dean BestUK...an attractive place to set up shop?

Dean Best | 17 November 2009

Sitting on the runway at Heathrow's Terminal 1 this morning - with bright blue skies and milky white clouds overhead - reminded just-food of the pleasant surprise that was Arla Foods' announcement yesterday (16 November) - the company's plans to build a super-dairy on the outskirts of London.

In the UK, we've become used to FMCG companies either taking their investment plans elsewhere - or deciding to move production overseas (Cadbury and Diageo being two FTSE 100 firms to decide to look outside the UK in recent years - although the latter's whisky workers are revolting).

We've become used to being told that, for reasons of cost or skills, you can't make stuff in the UK.

Arla's decision proves the UK can be an attractive place to set up shop - and, while the weak pound would have helped, dairy remains one of the sectors in which the country's infrastructure is competitive.

Nevertheless, the fact that it was Denmark's Arla - and not a UK co-op - that announced the multi-million pound investment does indicate that, while the UK can still attract some FDI, its own firms can sometimes lack the scale to match their foreign counterparts.

UK co-ops First Milk and Milk Link aborted a planned merger in February 2008, a transaction that would have brought the necessary scale to deal with the country's multiples - and to compete with the likes of Arla.

Last year's merger between Friesland Foods and Campina only underlined the need for a UK-grown dairy giant and, while just-food has heard industry watchers maintain consolidation is vital for UK dairy processors, there, as yet, appears few signs of movement.

Until then, UK dairy firms will remain in the shadow of their Continental counterparts.

It was dark clouds and drizzle that greeted just-food on arrival in Frankfurt, where we've travelled to visit this year's Food Ingredients Europe exhibition.

How have ingredients producers fared during the downturn? How have the demands of their customers changed? And how committed do suppliers remain to NPD?

These are the kind of questions we hope to answer this week. Keep your eyes peeled on the site for more.


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