Chellarams Group said it has entered into a joint venture, JV, called Chellarams DMK with Germany’s DMK Group.
Chellarams DMK will manage the production, marketing, sales and distribution of a full range of dairy products across Nigeria. Therefore, this partnership will be well-placed to meet the growing demand in Nigeria for dairy products.
Chellarams said in the statement filed with the Nigerian Stock Exchange that the venture would serve as the next phase in an existing partnership between the two companies which started as a simple distribution agreement 25 years ago. “The Nigerian consumer will benefit from the full range of products that DMK GROUP has deployed in other markets.
The company said Chellarams DMK LTD will have a product portfolio of established brands that resonates with the Nigerian consumers, including Oldenburger, Real Milk and Regal Milk. The Oldenburger brand is already one of the biggest-selling import brands for UHT milk in Nigeria while Real Milk and Regal Milk are well-established brands in all households.
‘Chellarams DMK LTD intends to invest in a larger distribution network by partnering with key distributors; thus establishing a strong presence across all sales channels, such as modern trade, general trade and food services’, the statement said.
However, the move is a major alert to Friesland Campina Wamco, a privately-owned dairy company with the largest dairy production volume in Nigeria. For many years, Friesland has been challenged in the market by Promasidor Limited and Arla Foods. The coming of Chellarams DMK as a local producer of dairy product will further put pressure on the category.
Friesland is a Dutch-backed, the coming of DMK Group, a German-owned comopany will see both companies understanding their individual strategy. For many years, Oldenburger, Real Milk, and Regal Milk have been targeted at the premium side of the market which might take a different positioning should the company produce locally.