Arla Expands Production in America

Arla is expanding its dairy in Hollandtown, Wisconsin to match American consumers’ growing interest in “premium” class quality cheese. The expansion will be completed in early summer 2011 and is set to boost sales.

Jul 22 2010 --- Despite the financial crisis, Arla’s American sales continue to rise. Last year, Arla's sales in the US rose by 10 per cent, and midway into 2010 volumes sold are showing a 20 per cent year on year increase.

The progress is remarkable in that the niche market for quality cheese, Arla's speciality in the US, saw a general decline during the crisis.

"Consumption of quality food products dipped during the financial crisis, but we managed to hold on and even win new contracts with large nationwide chains,” says Vice President Susie Møller Hjorth, Arla’s Country Manager for the US since November 2008. “It’s great to see consumption of niche products rising again.”

"Higher quality speciality cheese is particularly popular with the more affluent and educated sectors of the population and considering the size of the country, this is a huge group,” she explains.

70 per cent of Arla's products for the US are produced at Arla's two US dairies in Muskegon, Michigan and Hollandtown, Wisconsin while 30 per cent is imported from Arla's dairies in Denmark. The dairy in Hollandtown is now undergoing expansion to keep pace with rising sales.

"When the expansion is completed next year, we’ll be in a stronger position to compete for large contracts,” says Susie Møller Hjorth. “At the same time, Arla will be better placed to meet major customers’ demands for locally produced cheese and we’ll have the capacity to focus on product development and customer innovation.”

Arla sells around 16,000 tonnes to American consumers per year. This is only a fraction of total cheese sales in a market that is generally regarded as huge in terms of cheddar and processed cheese for burgers, pizzas and many other fast food products.

Cheese is 'the new beer'

But this is far from being the whole story about Americans and cheese, explains Susie Møller Hjorth:

“Specialty cheese has proven to be a very exciting product segment in the US markets, with its rapid development and sales over the past years. It is no longer like it was ten years ago when products from Europe were always regarded as better. Now with its many new cheese dairies and product varieties, a whole new market dynamic develops. Americans don’t have the same long standing tradition for cheese production as in Europe. They think differently, as can be seen from their beer production where microbreweries have been challenging the established breweries for years. We're seeing the same trend in cheese production right now.”

In American supermarkets, Arla products belong in the delicatessen departments. As Havarti and blue cheese are regarded as niche categories, this is an area with significant potential for boosting sales.

“Innovation continues to be a key factor with maintaining a firm focus with the US team in order to meet Arla’s ambitious growth targets for the US market. In order to continue the growth, it is extremely important that we always keep our innovative tools sharpened, emphasizing on the many opportunities.  For instance, if we can make our way into the sandwich and burger market with our Havarti cheese, our business can grow substantially,” says Susie Møller Hjorth.