Global dairy company and co-operative, Arla Foods, is rolling out serious investments throughout 2017 to the tune of US$358 million - one of its largest ever supply chain investments ever and almost 50% more compared with last year. Arla expects to invest in its production sites around the world to support its Strategy 2020 by moving more milk from bulk into branded retail sales and foodservice.
The investment plan was recently approved by the Board of directors and demonstrates how the company wants to expand production of branded high-quality products for Europe including a focus on production upgrades that will increase profitability of products sold in core markets such as Germany, UK, Denmark, Sweden, the Netherlands and Finland.
It also wants to focus on emerging markets outside of the European Union.
The plan contains investments of up to €335 million (US$358 million) in 2017, compared to €227 million (US$243 million) in 2016.
“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. 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,” says Arla CEO Peder Tuborgh.
According to Arla’s ‘Good Growth 2020’ strategy, one plan is to grow foodservice sales significantly by 2020 and the company is dedicating approximately €18 million (US$19.2 million) to expand and develop Arla’s production for foodservice customers.
One example is Rødkærsbro dairy in Denmark, which is one of the leading mozzarella sites in the world. By investing in new world-class state-of-the-art technology, Arla will be able to take the product quality to new heights as well as expand the site’s production of mozzarella for the international pizza industry.
The site Denmark Protein near Videbæk, which produces protein, lactose and other highly value-added whey-based ingredients for the global food industry, will receive the largest total investment amount in 2017 with approximately €30.6 million (US$32.7 million). The money will be spent on general upgrade and expansion of production facilities, including improvements of the sites protein and lactose processing.
“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. 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,” says vice-CEO and executive vice president of Arla’s supply chain, Povl Krogsgaard.
And there will be further investment in spreadable cheese packaging with a €12 million (US$12.8 million) investment in its key cream cheese dairy site in Holstebro, Denmark to introduce new, innovative packaging designs that will give products an edge on the supermarket shelf.
“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. 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,” adds Povl Krogsgaard.
Phase one of this project is expected to be completed by the end of 2017, with phase two to follow in 2018.
UK Investments
Meanwhile Arla Foods UK plans to invest approximately £37.5 million (US$46.6 million) in its UK sites and logistics in 2017, an increase of 51% from 2016.
Tomas Pietrangeli, Arla Food UK managing director said: “Last year, I unveiled the most ambitious UK business strategy to date to make Arla a household brand by 2020 and grow its revenue by nearly a third. This ambition is part of the company’s global strategy for growth and will position Arla as the champion of British dairy. By continually investing and improving our sites, we can ensure we grow capacity, maintain high quality of our products and ultimately return the best possible price to our farmer owners”.
The UK figure is part of the total investment Arla is making at its sites around the world.
The £37.5 million (US$46.6 million) will be spread across all its thirteen UK production, packing and distribution sites as well its logistics operation. The projects include:
- Taw Valley creamery, in Devon, will see £5m (US$6.2 million) to further develop capacity and harnessing latest technologies and process to support product quality for its award winning hard cheeses such as Cheddar, Red Leicester and Double Gloucester.
- £5m (US$6.2 million) at Stourton dairy, in Leeds, will see a number of projects that will include a new packing facility that will allow it to increase production of own-label flavored milk.
- A significant proportion of the £3.5m (US$4.3 million) at Arla’s state of the art fresh milk processing site in Aylesbury will go on new processing equipment for Arla B.O.B. The investment will allow the site to begin production of the successful and award-winning fat-free skimmed milk that tastes as good as semi-skimmed.
- The Westbury operation in Wiltshire, home to Anchor butter, will see £3m (US$3.7 million) spent on supporting facilities to ensure continuous product production during planned essential maintenance.
