Clover exits Danone supply and service contracts
JSE-listed Clover said on Wednesday that it would not renew several agreements with Danone Southern Africa when the contracts end in December 2014, enabling the branded consumer goods and beverages group to pursue other opportunities.
The company’s exit from the agreements would enable it to shed certain legacy restrictions that were limiting its scope for new product development and further principal distribution prospects, CEO Johann Vorster said.
“Going forward, Clover will be able to pursue certain attractive high-growth product categories, backed by our brand power and ability to achieve a strong market position,” he added.
Clover currently provided a range of yoghurt and other fermented product-related services for Danone, including raw milk and other raw material procurement, the manufacturing and packaging of custard, sales and merchandising services, distribution and certain information technology services.
“The relatively long lead-time to the end of our contractual agreement with Danone will enable a smooth transition for both parties and allow Clover to make several strategic investment decisions,” he added, pointing out that the decision was unlikely to negatively impact the company’s medium- to long-term earnings potential.
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