Olympic timing for First Milk’s acquisition of CNP

The deal marks another step for First Milk, the UK's largest dairy farmer co-operative, into the premium functional food sector, following its recent partnership with Fonterra to produce premium whey proteins.

In turn, the acquisition offers Manchester-based CNP a secure supply of key raw materials such as whey protein. But timing is also of the essence with the 2012 Olympics just weeks away.

First Milk chairman, Bill Mustoe, said:  “Within the sports nutrition sector, CNP Professional stood out as the company that was the best fit for us due to its sector credibility, focused product range, and the fact that it appeals to both mainstream and dedicated sports nutrition users. ​

Sports nutrition​

“Clearly, the London Olympics, which start in fewer than 90 days, also provides us with a sales opportunity for sports nutrition products.”​

However, Moody's Investors Service said that although the 2012 Summer Olympic and Paralympic Games are expected to provide a huge marketing opportunity, “the benefits are likely to be largely short-lived, providing only a temporary fillip to corporate earnings”.​

Moody’s added: “Increased brand exposure will put a silver sheen on the retail and consumer products sectors, but any longer-term benefits will be mainly from increased brand visibility, rather than actual sales.”​

First Milk supplies and markets 15% of the milk produced in the UK and boasts of being a major player in the cheese, dairy ingredients and liquid milk sectors.

Headquartered in Glasgow, the farmer-owned food business has a stated strategy of diversifying its product and customer base.

Mustoe said its experience with Fonterra and the growth projections on functional foods “sharpened our interest”.​

He added: "Since last summer we have looked at a number of opportunities that would add value to our existing business.​

 “We were particularly attracted to the sports nutrition sector where the market in Britain has more than doubled in the last five years, with this strong growth predicted to be maintained over the next five years.”​

£284M in 2013​

The UK sports nutrition market is set to grow by 12% next year, reaching £284M in 2013. This has been attributed to increasing focus on healthy and active lifestyles, but also the awareness and acceptance of sports nutrition products.

CNP aims to produce formulas to “aid elite athletes and general gym users alike”. Among​ its products are energy drinks. 

A Mintel report on the UK sports and energy drinks market, dated September 2011, states that it reached an estimated £1.15bn in 2011, up 16% in value on 2010. This is expected to nearly double by 2016 to £2.2bn.

It also stated that the upcoming 2012 London Olympics, as well as government drives to promote exercise and tackle obesity would make sport top of mind, “fostering a greater understanding and appreciation”​ of such drinks.