Arla to invest US360m to expand dairy products production

DENMARK – Danish dairy firm Arla Foods has announced that it will invest €335m ($362.23m) to expand production of branded dairy products for Europe and emerging markets.

The investment is nearly a 50 per cent increase compared to last year’s plan and one of the highest ever single-year supply chain investment forecasts in company history.

With an ambition to expand production of branded high-quality products for Europe and emerging markets, Arla has announced a new investment plan for the coming year.

Recently approved by the board of directors, the plan contains investments of up to 335 million euro ($362.23m) in 2017.

Most of the investments focus on production upgrades that will increase profitability of products sold on core markets like Germany, UK, Denmark, Sweden, the Netherlands and Finland as well as on production sites that supply high-quality dairy products to Arla’s emerging markets outside the EU.

“With these investments we continue our relentless pursuit of the goals in our Strategy 2020 to move more milk from bulk into brands and improve the profitability for our farmer-owners.

You will see Arla take an even stronger position in the market as the innovative farmer-owned dairy company, providing great-tasting, natural dairy products that help people make good food choices. That is the main focus of these investments,” says Arla CEO Peder Tuborgh.

Towards 2020, Arla expects 50 per cent of its growth to come from Europe with the other 50 per cent come from emerging markets outside Europe, where Arla’s strategic focus is especially on the regions Middle East and North Africa, China and Southeast Asia, Sub-Saharan Africa, and the U.S.

An important bet in Arla’s ‘Good Growth 2020’ strategy is to grow foodservice sales significantly by 2020.

Consequently, around 18 million euro of this year’s investments will go into expanding and developing Arla’s production for foodservice customers.

One such investment is 13 million euro ($14.06m) for Rødkærsbro dairy in Denmark, which is one of the leading mozzarella sites in the world.

“Overall, we have set an ambitious cost improvement target of EUR 400 million ($432.5m) to be reached by the end of 2019. This is done to secure the highest value for our farmers’ milk while creating opportunities for their growth,” says Povl Krogsgaard.

The 2017 investment forecast also includes 150 projects at a total investment of about 5 million euro ($5.4m) aimed at improving Arla’s energy efficiency.

January 31, 2017

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