Struggling dairy products maker Snow Brand Milk Products Co. said Monday it has signed an agreement with confectioner Lotte Co. to jointly set up a firm to manufacture and sell ice cream.
The new company, to be called Lotte Snow Co., will be set up by the end of July and will take over the ice cream operations of Snow Brand. The firm is scheduled to start operations Oct. 1 with a staff of around 230, consisting mostly of Snow Brand employees, company officials said.
Lotte will hold an 80 percent stake in the new company, which will be capitalized at around 3 billion yen, with Snow Brand taking a 20 percent stake.
Lotte plans to send an executive to the firm, Lotte officials said.
The deal is aimed at helping Snow Brand rebuild itself after a series of scandals, including a widespread food-poisoning outbreak in 2000 and a food-mislabeling scam at subsidiary Snow Brand Foods Co., which has since been disbanded.
The new company is hoping for sales of 20 billion yen in the 2003 business year, which ends in March 2004.
Snow Brand officials said the two companies combined have an 18 percent share of the domestic ice cream market, larger than market leader Morinaga Milk Industry Co.'s 12 percent.
In the 2001 business year, Snow Brand had sales of 27 billion yen for a market share of 8 percent, while Lotte's sales came to 37.4 billion yen, making for a share of 10 percent.