As Clover gains traction on its ambitions of re-entering the yoghurt market by the first quarter of 2015, the JSE-listed branded consumer goods and beverages group announced plans to buy DairyBelle’s yoghurt and ultra-high-temperature (UHT) milk manufacturing, marketing and distribution businesses for R125-million and R30-million respectively.

“The acquisition of the DairyBelle assets provides Clover with an entry into the highly attractive and profitable yoghurt market, which is one of the major opportunities arising from the expiration of the Danone Southern Africa contracts later this year,” CEO Johann Vorster said on Thursday.

Clover planned to merge its own sales and distribution capabilities with the new assets to further develop the current DairyBelle brands and launch its own branded products into the market.

The addition of DairyBelle's UHT production facilities, in the Western Cape, would also enable the JSE-listed group to improve efficiencies through the more effective use of its raw milk supply in the region.

The group, which aimed to capture 20% of the market over the next five years, was expected to gain market shares of 10% in yoghurt and 19% in UHT milk after the conclusion of the transaction.

The acquisition would enable DairyBelle to narrow its focus to its core business – cheese and niche butter products, explained DairyBelle CEO Pedro Viudez.

The acquisition remained subject to conditions, including competition authority approvals, which were expected to be completed by the end of July 2014.

FINANCIAL PERFORMANCE
Meanwhile, Clover on Thursday said it expected to post 20% lower earnings for the year to June 2014, as a number of factors weighed on sales volume growth and earnings growth.

The company experienced a “very constrained” trading environment, where the full recovery of raw milk price increases and strong overall inflationary cost pressures would not be achieved.

Further, selling price increases on impacted on sales volumes, as did rising inflation, Clover reported.