Arla invests in Skyr and cottage cheese as high-protein dairy demand grows

Protein is becoming less of a specialist nutrition proposition and more of an everyday food choice, with dairy among the categories benefiting most from the continued shift. Skyr and cottage cheese, in particular, have moved well beyond their traditional niches as consumers look for convenient foods that combine protein, taste, and versatility.

The acceleration in Skyr and cottage cheese demand is increasingly being reflected on the supply side. One of the latest developments is Arla Foods investing more than €63 million (US$74 million) to expand Sskyr and cottage cheese production in Germany and Sweden, adding capacity to two categories that have recorded strong growth across its European markets. 

The cooperative is putting €35 million (US$39.5 million) into Skyr production at its Upahl site in Germany and a further €28.3 million (US$32 million) into cottage cheese production at Falkenberg in Sweden, with both projects due to come on stream progressively through 2028.

Arla says Skyr volumes across its European markets have increased by more than 33% over the past three years, while cottage cheese volumes have risen 25%. 

The figures point to a broader change in how consumers are using dairy: products once associated with particular eating occasions or demographics are increasingly being positioned as convenient, protein-rich components of everyday meals and snacks.

Cottage cheese comeback

The trajectory is particularly notable for cottage cheese, which has undergone something of a category revival. F&B innovators are also exploring upcycled ingredients to develop alt-cottage cheese to meet growing demand.

“Consumer preferences continue to evolve, and we see growing demand for products with high-protein combined with convenience and great taste. Dairy products such as Skyr and cottage cheese continue to resonate with consumers across many markets, and these investments reflect our ambition to make these products available to more people,” says Peder Tuborgh, CEO of Arla Foods.

FoodIngredientsFirst has previously reported on the resurgence of the product as consumers have responded to its high-protein profile and versatility, while more recent developments suggest that the momentum is translating into significant commercial investment. 

In January, L Catterton agreed to acquire a majority stake in US cottage cheese brand Good Culture amid what the company described as a near-60% rebound in the category. 

Expanding capacity

Arla has been expanding its own position in the segment on several fronts. In May, the company announced the acquisition of Australian cottage cheese producer Brancourts, pointing to a market there that had grown by more than 40% amid interest in health and protein-focused foods. 

The move followed further investment in Swedish production and now sits alongside the latest expansion. 

Skyr expands beyond its Nordic roots

Skyr, meanwhile, illustrates how a product with strong regional roots can become part of a much broader protein proposition. Once closely associated with Icelandic and Nordic dairy traditions, it has steadily expanded into mainstream European markets.

Food Ingredients First has tracked how industry players previously identified Skyr as an emerging force in dairy because of its combination of high protein, its relatively low fat characteristics, and mild taste. 

What is changing is not simply the popularity of individual products. Protein is increasingly influencing the architecture of dairy portfolios, from yogurt and fermented products to drinks, desserts, and cheese. 

Innova Market Insights data shows that European food and beverage launches containing dairy protein have continued to grow, with sports nutrition remaining an important application, but dairy itself is also seeing increased use of protein ingredients across categories.

That expansion also reflects a widening definition of who protein products are for. While performance nutrition helped establish the high-protein proposition, the category is now being linked to satiety, active lifestyles, convenience, and everyday nutrition. 

More recently, Food Ingredients First has reported on how the rise of GLP-1 weight-loss drugs is adding another dimension, with high-protein dairy such as yogurt and cottage cheese being considered in the context of consumers seeking more nutrient-dense foods in smaller eating occasions. 

For dairy processors, that creates a different challenge from simply launching another high-protein SKU. Sustained demand requires investment in processing capacity, formulation, and texture, while the economics of turning milk into higher-value products become increasingly important. 

Arla’s latest investments, therefore, offer a useful snapshot of a much wider shift: as protein becomes embedded in mainstream food culture, the competition is moving upstream, toward the capacity and technology needed to produce it at scale.

“These investments ensure that we can continue meeting growing consumer demand, supporting our customers, and creating long-term value from our farmer owners’ milk. The growth we are seeing in Skyr and cottage cheese gives us confidence in the long-term potential of these categories,” says Tuborgh.