Arla to move some production to newly acquired Middle East site

DENMARK – Arla Foods has announced that it has reached a decision to move certain processed cheese and sterilized cream production from three of its sites to the newly acquired site in Bahrain, the Middle East.

Arla Foods is moving its production lines from its Bislev and AKAFA sites in Denmark and from its Riyadh site in Saudi Arabia to Bahrain, after completing the acquisition of Mondelēz’s processed cheese business in the Middle East region.

The company plans to move approximately 26,000 tons (annually) of processed cheese from Bislev, potentially impacting about 40 jobs; 18,000 tons (annually) of sterilized cream from AKAFA, potentially impacting about 35 jobs, while volume estimates for the Riyadh site are yet to be established.

“It makes a lot of sense for us to place the production of these exact products at the newly acquired site in Bahrain, since these products are primarily made for the Middle East and North Africa and in lesser degree for other markets,” said Head of Supply Chain in Arla, Executive Vice President Sami Naffakh.

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“It gives us a strong regional supply chain footprint that enables us to secure long-term competitiveness in the region through scale and efficiency, and the pilot plant at our new Bahrain site will allow us to innovate in new ways within this category.”

The move is expected to be fully implemented in late 2020 and mid-2021, to ensure a smooth transition.

Built in 2008, the Bahrain facility has a capacity exceeding 66,000 tons with an on-site innovation pilot plant.

Arla said it expects to improve the shelf life of its products by 4 weeks as transport time to customers in MENA will be reduced significantly.

Employee transition

The company has indicated that it has informed the employees at the sites on the intention to move some of the production capacity and will help them transition well.

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“As soon as we are able to confirm the exact volumes that will be moved, we will engage with affected employees to ensure they are supported to move on in a good way, either to jobs at other Arla production sites or outside Arla,” said Sami Naffakh.

Arla has identified the Middle East and North Africa (MENA) as one of the key geographical regions in its Good Growth 2020 strategy.

According to the company, since 2010, it has more than doubled its sales organically across the MENA region, which is its largest market outside Europe.

In 2018, Arla’s retail and foodservice revenue in the MENA region reached EUR 560 million (US$629.13 million).

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