Arla Foods invests US$655m in long-term dairy growth

31 Jan 2018

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31 Jan 2018 --- Arla Foods has announced plans to invest €527 million (US$655 million) this year, as the company continues to deliver on its 2020 growth ambition. The decision to increase the investments of the company was approved during a meeting in London earlier this week by Arla Foods’ board of directors.

The dairy cooperative will invest in new, expanded and improved production capacity as well as innovative technology.

Chairman of Arla Foods Åke Hantoft highlights that all investments by Arla Foods are made to secure long-term growth and profit opportunities for the company’s 11,200 farmer owners across Europe.

“Arla has a history of good investments for sustained growth. The board of directors has decided to increase our investments with this plan because we have identified new projects and investments with short and long-term potential for significant return. The business growth these investments will create for our company will generate growth opportunities for our farmer-owners. We see these investments as essential to the future of our business,” says Hantoft.

FoodIngredientsFirst has reached out to Arla Foods for further comments on the investment.

While global milk production continues to be volatile, dairy consumption worldwide is growing at a fast pace and the company has extensive growth opportunities as it embraces the challenge to meet the growing demand for dairy.

50 percent of the investments in 2018 are targeted projects aimed at growing Arla Foods’ sales outside Europe, where the company’s fastest growing strategic growth markets are the Middle East and North Africa, China and Southeast Asia, Sub-Saharan Africa, and the United States.

Two thirds of this year’s spend will focus on increasing Arla’s European production capacity, with €266 million (US$330.8 million) being invested in Denmark, €82 million (US$102 million) in the UK, €78 million (US$97 million) in Sweden, and €65 million (US$80.8 million) in Germany and €36 million (US$44.7 million) for production in other countries.

Commenting on the investment plan Peder Tuborgh, CEO, Arla Foods says, “This investment plan is a growth plan aimed at expanding our positions in key dairy categories and geographic markets where Arla is already a key player. Our ambition is to create an even stronger foundation for our farmer-owners and our future business growth.”

Lactofree production in the UK
Continued investment in healthy and natural products that match consumer lifestyles feature strongly in Arla Foods’ investment plan. The investments come as Arla Foods continues to deliver on the major food trends influencing consumer demand for health dairy products as part of a natural and balanced diet.

Having led the way in Lactofree dairy production, Arla will use its experience from its Scandinavian markets and a €56 million (US$69.6 million) investment for the production of Lactofree products at its Aylesbury site in the UK.

In Southeast Asia and Sub-Saharan Africa, disposable income is increasing and families are increasingly demanding nutritious dairy products. To be able to supply the increasing demand, Arla plans to expand its production site in Pronsfeld, Germany that supplies milk powder and UHT milk for many of the growth markets outside of Europe.

The investment in 2018 is €10 million (US$12.4 million), with another estimated €180 million (US$223.9 million) over the next two years. The project will add another milk drying tower to the existing production of milk powder in Pronsfeld, Germany. Construction is planned to start in late 2018, subject to all governmental approvals. It is expected to be ready for production in 2021.

Leading the way in whey
Several of the projects in the investment plan reflect on the ambition to increase the quality and value of its production.

With its subsidiary Arla Foods Ingredients, the company has taken a by-product once cast aside from cheese production and is now leading the way in whey with high-quality value-added whey protein ingredients for food industry customers around the world.

Arla Foods will invest more than €100 million (US$124.3 million) in new, technology and capacity expansions for its production of natural whey protein ingredients.

In Sweden, a further €5 million (US$6.2 million) will be invested by Arla Foods to add a whey processing capacity at Falkenberg, Sweden, dairy that can concentrate the whey from the site’s cottage cheese production.