PepsiCo has teamed up with German privately-owned dairy firm Unternehmensgruppe Theo Müller to open a US$206m yoghurt facility in New York, US.

The plant, to be located at Genesee Valley Agri-Business Park in Batvia, will be established through a joint venture between the two firms called Wave Holdings. The facility will produce a range of new yoghurt products, however, the companies are yet to decide on specific brands.

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The plant is expected to be built over a two-year period with the expectation of creating around 186 jobs. No date has been give for the ground-breaking of the facility. New York state and Genesee County have agreed to offer around $26m in tax credits for the deal.

Müller is Germany’s largest privately-owned dairy business employing around 4,700 throughout Europe and Israel with sales of around EUR2.2bn (US$2.96bn). The company produces a line of six different premium yoghurts, including its leading brand in the UK, Müller Corner.

“This project demonstrates that leading international companies like PepsiCo and Muller see New York as a premier place to invest and the natural choice for their first venture into the yogurt business,” Governor Andrew Cuomo said in a statement.

The announcement ends months of speculation about a potential deal between PepsiCo and Muller. PepsiCo has made a series of moves in the dairy sector since it formed a global nutrition unit last year to look at ways to expand into the industry, including its purchase of Russia’s largest dairy processor Wimm-Bill-Dann. But the company had, until now, made no inroads into its domestic dairy industry.

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According to data from Euromonitor in October last year, US yoghurt sales are estimated to have increased by 7% to 9% in 2010 to around $6.57bn.

The investment will continue a strong recent trend of major yoghurt producers opening manufacturing facilities in New York. In 2011, major investments were made by two of the nation’s largest yoghurt producers – Chobani and Fage.