French dairy giant Danone and Swedish dairy cooperative group Skånemejerier said on Thursday they will set up a Nordic joint venture to produce and market both the groups’ products on the Nordic market.

Danone said it hopes the new cooperation will help it increase its Swedish sales by a whopping 50% to SKr60m next year, while Skånemejerier for its part said it aims for a sustainable growth of 20-30%.

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The parties had not yet decided on how large an equity base the new, as yet unnamed company would get. The business within the new company is planned to start almost immediately.

The new pact will allow Skånemejerier to increase its share of high-value products by producing such products under the Danone brand, thus also increasing the product range which the group can offer the retail industry. Desserts will immediately be added to its product range.

Skånemejerier’s best-selling functional food product ProViva, which contains the beneficial bacteria culture Lactobacillus planterum 299v, will not be part of the joint venture, although they said they will focus heavily on developing new functional foods together.

Danone, which can now draw on Skånemejerier’s distribution network, also said it would certainly market some of Skånemejerier’s products on markets outside Sweden in the future.

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The joint venture also means that Skånemejerier, which has been dwarfed in the shadow of the Nordic giant Arla Foods, which started its operations this year as a result of the merger between Arla of Sweden and Danish MD Foods, will get substantial muscles when backed by SKr112bn-strong (in sales) Danone. Skånemejerier, meanwhile, only had a turnover of SKr2.5bn last year.

The new company will initially focus on the Swedish, Danish and Finnish markets, but will soon also include Norway, they said.