Arla milk
Arla Foods is the seventh largest dairy company in the world.

AARHUS, DENMARK — Arla Foods, a global dairy cooperative based in Denmark and the seventh largest dairy company in the world, has unveiled plans to invest €335 million in its production sites during 2017. The investment is part of “Strategy 2020” and represents a 50% increase from the company’s efforts in 2016, when Arla invested €227 million.

As part of the plan, Arla said it intends to shift more milk from bulk into branded retail sales and food service. Most of the investments focus on production upgrades that will increase profitability of products sold in core markets like Germany, the United Kingdom, Denmark, Sweden, the Netherlands and Finland, as well as on production sites that supply dairy products to Arla’s emerging markets outside the European Union, the company said.

Peter Tuborgh, Arla
Peder Tuborgh, c.e.o. of Arla

“With these investments we continue our relentless pursuit of the goals in our Strategy 2020 to move more milk from bulk into brands and improve the profitability for our farmer-owners,” said Peder Tuborgh, chief executive officer of Arla. “You will see Arla take an even stronger position in the market as the innovative farmer-owned dairy company, providing great-tasting, natural dairy products that help people make good food choices. That is the main focus of these investments.”

One goal of Arla’s “Strategy 2020” initiative is significantly increasing food service sales. To that end, approximately €18 million of the company’s 2017 investment will go toward expanding and developing Arla’s production for food service customers. Among the investments is €13 million earmarked for new technology at the company’s Rødkærsbro dairy in Denmark, which is one of the leading mozzarella sites in the world.

Arla cheese

Arla said the biggest investment during 2017 will go toward its Denmark Protein site in Videbaek, Denmark. Approximately €30.6 million will be invested on general upgrade and expansion of production facilities, including improvements to the site’s protein and lactose processing equipment.

Povl Krogsgaard, Arla
Povl Krogsgaard, vice-c.e.o. and executive vice-president of Arla’s supply chain

“One of the ambitions in our Strategy 2020 is to be a global leader in natural whey ingredients for food producers in a range of categories — from bakery, beverages, dairy and ice cream to medical, infant and sports nutrition,” said Povl Krogsgaard, vice-c.e.o. and executive vice-president of Arla’s supply chain. “The investment in our Denmark Protein site is key to meeting that ambition, and it will help us build on an already strong and profitable part of Arla’s business.”

Another high priority for Arla during 2017 is the spreadable cheese and cream cheese category. Arla said it plans to build on its already strong market positions in the category in Northern Europe, Middle East and the United States and is now ready to invest more than €12 million in its key cream cheese dairy site in Holstebro, Denmark. The investment will be used, in part, to launch new, innovative packaging designs that the company hopes will give products an edge on the supermarket shelf.

Arla cream cheese

“We are now stepping up our sales ambitions for spreadable cheese and cream cheese both in Europe and in our emerging markets, where more consumers look for products containing natural ingredients,” Mr. Krogsgaard said. “Combining clean label with good taste, Arla and Puck spreadable cheeses and cream cheeses meet the growing demand from consumers. More than ever before, having the right, unique packaging is a key driver to differentiate on shelf in this category, so we are now investing to rebuild our processing, filling and packaging lines at Holstebro Cream Cheese as well as our storage capacity.”

Phase one of this project is expected to be completed by the end of 2017, with phase two to follow in 2018.

Finally, Arla plans to invest €22 million across all its sites to improve energy efficiency.

Arla milk

“Arla already runs one of the most efficient supply chains in our industry, and every year we find new ways to make our production sites even more efficient as we work to establish one European milk pool to ensure a more holistic use of our milk across the Arla group,” Mr. Krogsgaard said. “Overall, we have set an ambitious cost improvement target of €400 million to be reached by the end of 2019. This is done to secure the highest value for our farmers' milk while creating opportunities for their growth.”

The 2017 investment forecast also includes 150 projects at a total investment of about €5 million aimed at improving Arla’s energy efficiency.