Company News

Alaska and Nestle Agree on Sale and Licensing of Canned Milk Business

Alaska Milk Corporation and Societe de Produits Nestle have agreed for Nestle to sell its brands ALPINE, LIBERTY and KREM-TOP including all trademark properties, to Alaska in the Philippines. The transaction was finalized April 16, 2007. LIBERTY and ALPINE are strong regional milk brands, particularly in Visayas and Mindanao, while KREM-TOP has an established record in the food service business.

Under a separate agreement with Alaska, Nestle will also provide Alaska the long-term license to manufacture and sell CARNATION Evaporated Creamer, CARNATION Condensada, and MILKMAID Sweetened Condensed Milk, under the Nestle quality guidelines. "We look forward to adding these leading brands to our existing portfolio of quality milk products," said Wilfred Steven Uytengsu, President of Alaska Milk Corp. "This transaction will add about P3 billion in annual revenues to our business, providing our Company with established brands that mirror our overall corporate strategy while enhancing our long-term vision of growing the milk category, which includes canned milk and creamers. Each of these brands has a strong positioning within its category, a loyal consumer base and a brand name associated with quality. On the part of Alaska, the agreement with Nestle also provides focus on our core business."

Global food giant Nestle had recently announced the sale of its liquid milk manufacturing facilities in Thailand to food company F&N, and licensed the CARNATION brand to F&N along with the deal. According to Nestle, the agreements with Alaska will enable Nestle to focus its efforts on higher value-added branded products, thus, accelerating its transformation towards nutrition, health and wellness. Alaska is the market leader in both the Evaporated and Sweetened Condensed Milk categories. Alaska’s highly successful dual strategy of premium pricing for its liquid filled milk and value pricing for its Creamer brands ALASKA Evaporada and ALASKA Condensada fortified its leadership position against competition last year to at least half of the market. The combination of brand Alaska and these newly acquired and licensed brands will bring the Company to an even more commanding presence in both categories.

"Despite the dominant presence we expect to have in the liquid milk categories with this deal, we cannot be complacent," Uytengsu added. "We will continue to build the liquid milk categories; thereby, helping provide nutrition to Filipino families, especially given the concerns on affordability among our lower-income households. These categories are responsive to advertising, product innovation and extensions of new products."

Given these new brands, Alaska will be able to maximize its current sales structure and nationwide distribution system, covering both the modern trade and traditional retail trade. Moreover, these provide opportunities for AMC to strengthen its business in new channels of distribution, especially within the food service sector.

With the cooperation between Alaska and Nestle, a smooth transition of ownership and licensing is expected over the next couple of months.

Alaska Milk Corporation, which has been publicly-listed since 1997, previously announced that it has invested P675 million in building a new powdered milk facility in San Pedro, Laguna to cope with the increasing demand in its powdered filled milk business. Brand ALASKA has the highest top of mind recall in liquid milk and is a major player in the powdered milk market, with a market presence for more than 30 years. With the conclusion of this deal AMC is poised to become a stronger and better company.