The dairy farmer co-operatives now making Yoplait for the Canadian market will do so for at least six more years but will also launch their own new yogurt and dairy goods line this summer.
A custom processing agreement announced Tuesday between Ultima Foods and the Canadian arm of the Yoplait brands' majority owner, U.S. food processing giant General Mills, ends months of uncertainty about the Yoplait products' future production in Canada.
The deal calls for Ultima, a dairy processing joint venture between Quebec's Agropur and Edmonton-based Agrifoods International, will continue to make Yoplait products at its Granby, Que. plant at the same volume it does now.
General Mills Canada, meanwhile, will market, distribute and sell the Yoplait brand products across Canada, the Yoplait partners said in a release.
Those brands include Yoplait Source, Creamy, Yoptimal and Asana yogurts; the Minigo and Tubes products aimed at the children's food market; and Yop, a "drinkable yogurt" beverage.
"Yoplait is a brand leader in Canada, with a long history of quality and innovation," Dave Homer, president at General Mills Canada, said in the release. "We will leverage Yoplait's global innovation pipeline to bring new offerings to the marketplace that will excite Canadian consumers."
In the meantime, however, Ultima has been working on a parallel plan to bring a separate new brand to the yogurt and dairy foods market.
To that end, Ultima said Tuesday it will also invest $10 million in the Granby facility starting this fall to boost the plant's production capacity by 15 million kilograms per year.
The capacity expansion at Granby will boost its production to 130 million kg. "Further investment will be made depending on the company's production needs," Ultima said Tuesday.
Ultima, which also already owns and produces the Olympic brand of dairy goods, said Tuesday its as-yet unnamed new yogurt and fresh dairy product brand will launch starting in mid-August 2012.
"This brand will be entirely created and manufactured in Canada and will include a full and original line of products and flavours that suit the tastes of Canadian consumers."
"Thanks to our skilled employees, an unparalleled capacity for creation and innovation, a portfolio of unique recipes and world-class facilities, our brand will be a great success," Ultima CEO Gerry Doutre said. "The Canadian yogurt market is in full growth, and we will solidify our place in this market.
"With the combined manufacturing of products for our brand, for Olympic and for Yoplait, Ultima Foods will remain a major player in the Canadian food industry," he said.
"This sequence of events is the result of the steadfast determination of the members of Agropur and Agrifoods to remain key stakeholders in the production and merchandising of yogurt across the country," Agropur said in a separate release Tuesday.
Ultima's license to make Yoplait was due to expire in September. Its renewal had been uncertain after Minneapolis-based General Mills bought a controlling stake in the worldwide Yoplait business for US$1.2 billion in July last year.
The other half of the Yoplait joint venture, headquartered in France, remains owned by that country's biggest dairy co-operative, Sodiaal.
"Two options present themselves: renew the license, or launch (Ultima's) own brand," Pierre Claprood, Agropur's CEO at the time, said in the Quebec co-op's 2011 annual report.
"Faced with the increasingly obvious alternative of not renewing the license, we have developed the brand launch scenario in some detail."
Agropur had reported Ultima's 2011 earnings were affected by "costs related to the renewal of the Yoplait license and the development of alternative business options and plans that would enable it to pursue its yogurt manufacturing and distribution operations should the Yoplait license not be renewed."