Arla Foods is to acquire the Yeo Valley Dairies subsidiary of the Yeo Valley Group. The deal will give the farmer-owned dairy cooperative the rights to use the Yeo Valley brand in milk, butter, spreads and cheese under an intellectual property licence with Yeo Valley.

The Yeo Valley yoghurt, ice cream, cream and desserts business will continue to be run independently through Yeo Valley Group, which remains under the ownership of the Mead family.

Commenting on the deal, Tomas Pietrangeli, managing director of Arla, said:“The potential for future investment in range through this licensing agreement with Yeo Valley provides a significant opportunity to offer a greater choice to consumers at attractive prices. Our ambition is to encourage customers to trade up from standard to organic milk, butter and cheese, driving overall growth for organic across dairy categories.”

He continued: “Arla Organic Free Range milk has driven 60 per cent of all the growth within the organic milk category in the last 12 months, with 70 per cent of all Arla Organic Free Range milk sales attributable to customers who would have not previously purchased organic milk. Through the licence to use the Yeo Valley brand, we believe that we can further drive organic penetration of the milk market.”

Tim Mead, organic farmer and overseer of the family business, added: “Arla’s farmer-owned credentials are aligned to the values and ethos that the Yeo Valley brand is based on – ‘Supporting British Family Farms’. We have a long-held ambition to grow organic dairy in the UK, because at Yeo Valley, we believe that organic dairy is better for the planet, for the cows and for health.”