Arla Foods Stops Producing Emmental 

11/06/07 Arla Foods will stop producing emmental in order to focus on milk powder and mozzarella. The decision means that Aars Dairy in Denmark, which produces emmental only, will cease operations.

At a meeting on Thursday, Arla Foods’ Supervisory Board decided to close Aars Dairy in Denmark. The decision marks the end of Arla Foods’ emmental production. Instead, the milk will be used mainly for the production of milk powder and mozzarella. Both products belong to the Group’s strategic products.

The closure should be seen on the backdrop of unusually high prices for milk powder due to drought conditions in Australia, low stocks in Europe and the US and rising demand for milk powder in Asia and elsewhere. Another factor has been that earnings from yellow cheese, including emmental, have been under considerable pressure for some time.

”Having analysed the milk powder market, we believe that prices will remain high for at least 1-2 years,” says Arla Foods’ Production Director Niels Lange Jørgensen. “At the same time, we believe that mozzarella has significant growth potential and therefore we’ll need the milk for mozzarella production at Rødkærsbro Dairy where production capacity is being expanded from 38,000 to 50,000 tons. Besides the need to channel the milk into more profitable product lines, one reason for closing Aars Dairy is that emmental falls outside the focus products specified in Arla Foods’ strategy.”

The 70 employees were informed of the decision at a meeting on Friday morning and were told that the dairy would cease production in October. The dairy’s packing and warehouse section will continue until the end of the year when Aars Dairy will be finally closed.