Arla Foods unveiled a boost in its annual spending drive to a record E527m ($655m), in a bid to harness accelerating world demand for dairy products, largely outside the co-operative’s European heartland.
The Danish-based group raised its investment plan from last year’s E335m in a bid to expand its “positions in key dairy categories and geographic markets where Arla is already a key player”, said Peder Tuborgh, the co-operative’s chief executive.
The great majority of the 2018 budget was destined for boosting production capacity in Europe, including E266m to be spent in Europe, and E82m in the UK, where Arla is to develop capacity for lacto-free dairy.
‘Growing faster than it ever has’
However, much of this spending was aimed at boosting offerings elsewhere with the group saying that “50% of the investments in 2018 are targeted projects aimed at growing Arla Foods’ sales outside Europe”.
The co-operative, which operates in 120 countries, highlighted that its “fastest growing strategic growth markets are Middle East and North Africa, China and South East Asia, sub-Saharan Africa, and the US”.
“While global milk production continues to be volatile, dairy consumption worldwide is growing faster than it ever has,” the co-operative said.
“Arla Foods has extensive growth opportunities as it embraces the challenge to meet the growing demand for dairy.”
‘Disposable income is increasing’
Projects aimed in particular at foreign markets include an expansion of milk powder production capacity at the group’s Pronsfeld plant in Germany, which will receive investment of E190m over the next three years.
“In South East 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 Arla Foods’ strategic growth markets outside Europe.”
(Source – https://www.agrimoney.com/news/arla-hikes-investment-to-feed-accelerating-world-demand-for-dairy-51541)