Welsh lose to French in bid for Rachel’s Organic

by Richard Misstear - 29/07/2010

"ONE of Wales’ most high-profile food brands – Rachel’s Organic – has been sold by its American owners to a rival French firm."

The dairy firm, based in Aberystwyth and best known for its organic yoghurts, has been bought by Groupe Lactalis, a subsidiary of BSA International.

The deal comes just weeks after a Welsh-based consortium bid for the business was knocked back by company owner Dean Foods and sale agents Rothschild.

Organic milk co-op Calon Wen had put together a bid package with a number of unnamed businesses.

But when Calon Wen approached Dean Foods, it was told it was too late.

Former owners Dean Foods said it was unable to disclose the details of the sale agreement but said it was “business as usual” at Rachel’s for the 140 staff employed there.

Speculation about the future of the company, which has a turnover of around £30m, first emerged in May when the business was put on the market with a £20m price tag.

Dean, which owns more than 50 American dairy brands, including Meadow Gold ice cream, Land O’Lakes and Oak Farm, was forced to drop its earnings guidance for 2010 because of intense competition in the milk market, causing its shares to fall to a 10-year low.

The company is restructuring, with plans to cut more than 500 jobs this year and $300m over three to five years.

A spokeswoman for Dean Foods said: “Certain subsidiaries of Dean Foods and BSA International, SA, a company under common control with Groupe Lactalis, have entered into an agreement in which BSA International will acquire Dean Foods’ Rachel’s United Kingdom business.

“Rachel’s is a premium yoghurt brand which carries with it a rich history and strong brand equity as the second largest organic dairy brand in the UK. “This transaction allows Dean Foods to grow the core elements of its portfolio that will yield the greatest return for shareholders.

“It remains business as usual at Rachel’s at this time.”

Calon Wen Co-op chairman Richard Tomlinson said they were disappointed they weren’t given time to submit a Welsh package.

“The company had been in negotiations with two other interested parties for six weeks and, being a long way down the road, didn’t want to re-start talks,” he added. “It’s also slightly worrying that any potential purchaser hasn’t been in touch with us, as Rachel’s main suppliers, to secure the company’s milk field.”

Rachel’s is the biggest private sector employer in Aberystwyth and also supports a significant number of jobs in terms of indirect employment, including local organic milk suppliers.

The company traces its origins back to Brynllys Farm, just outside the village of Borth, where the family of its founder Rachel Rowlands had a diary farm.

Rowlands’ mother was one of the first people to sign up to the Soil Association in 1952, and Brynllys went on to become one of Britain’s first certified organic dairies.

Rowlands and her husband Gareth took over in 1966, supplying organic milk to the Milk Marketing Board.

But their move into the yoghurts for which they are now best known came about accidentally in 1982 after freak snow storms hit the Aberystwyth area, preventing the milk tankers from reaching the farm.

The family distributed emergency supplies of milk locally, and converted some of the remaining milk into butter and cream by hand.

The couple began to sell milk, cream and home-made butter and yoghurt locally and in weeks they faced an enormous demand from local shops and hotels.

By 1984 yoghurt was being made regularly in the farmhouse kitchen to a formula that Rachel took from her grandmother’s recipe book.

After Rachel’s Organic was created it expanded quickly between 1985 and 1990, leading to a new dairy being built, and its products stocked by major supermarket chains.

Today, the 100% organic company supplies Waitrose, Sainsbury’s, Tesco and Morrisons as well as The Ritz Hotel, Eurostar and a host of independent retailers, with more than 10 million pots of yoghurt.

The business was bought by US-based Horizon Organic Diary in 1999 for £1.5m.

Mr and Mrs Rowlands have continued as consultants with the business ever since.

It is understood their consultancy contracts were recently renewed by Dean.

No one from Groupe Lactalis was available for comment.

More Details: http://www.walesonline.co.uk/news/wales-news/2010/07/29/welsh-lose-to-french-in-bid-for-rachel-s-organic-91466-26953197/