Dutch processor FrieslandCampina has enlarged its footprint in central Asia after agreeing to acquire a 51% stake in Pakistan’s second-largest dairy company, Engro Foods, for €420m. Friesland say the acquisition will give it a key position in the world’s third-largest milk-producing country with annual milk production in Pakistan of 38bn litres.

Friesland says it expects this investment to pay dividends as the Pakistani market converts from loose consumption of dairy to greater demand and sales volumes of packaged dairy products in the coming years.

At present, less than 10% of tradable milk consumed in Pakistan is processed and offered in packages, with the conversion to packaged expected to accelerate significantly in the near future as a result of a growing middle class.

Engro Foods was established in 2006 and is the leading provider of UHT milk in the Pakistan market. Operating from two processing sites, Engro took in more than 300m litres of milk last year from its 150,000 suppliers and had revenues of €450m.

Friesland chief executive Roelof Joosten said the deal would give the Dutch dairy giant a significant presence in the Pakistani dairy market in which a growing middle class is switching to buying more processed and packaged milk.