Arla to explore exports from UK in new 5-year strategy

Arla Group has announced new growth ambitions in the UK for the next five years, following the launch of the global Future26 strategy.

As part of the growth strategy, Arla said it will also explore export opportunities out of the UK for the first time as well as the need for more milk, from existing and potentially new farmer owners in the UK.

Britain’s largest dairy cooperative is also planning long-term investments in its UK supply chain, key sales channels and market leading brands like Arla Cravendale, Arla B.O.B, Arla Lactofree, Lurpak, Starbucks and Anchor, as it looks to become a leading household name.

Arla said it will adopt a combination of branded and added-value private label innovation in prioritised categories like liquid milk, yogurts, butter and spreads, milk-based beverages and cheese over the next five years. The ambition is to grow the branded share of the revenue to 45 per cent from 38 per cent.

The company will continue to take an industry lead on data-driven sustainable dairy production that meets the 1.5-degree goal set by the Paris Agreement.

In the next five years the Arla Group will increase its investments by more than 40 per cent to over €4 billion (around £3.4bn) in sustainability actions, product innovations, capacity expansions and digitalization. As the single biggest market in Arla’s global business, this will also mean increased investments for Arla’s UK operations, with a focus on efficient and sustainable production and categories and channel opportunities such as added-value milks, foodservice and ecommerce.

As previously announced, Arla also targets more than 50 per cent growth across its UK organic retail and foodservice business in the next five years.

“This growth and value-up ambition is about improving the value of dairy for our consumers through high quality products that meet their demands, for our retail and foodservice customers as we add category value and growth, and for farmers through a sustainable farmgate price,” says Ash Amirahmadi, managing director of Arla Foods UK.

“The milk that goes into products like Cravendale, B.O.B and Lactofree dairy products comes from Arla’s farms, where our owners are already among the most climate efficient dairy farmers in the world, producing milk with around 50 per cent fewer emissions than the global average. But with an ambition to reduce on-farm emissions by an additional 30 per cent by 2030, big investments are still needed on farms. Therefore, in the UK, our Future26 strategy will ruthlessly focus on creating the maximum value of all our milk that enables dairy farmers to invest more in on-farm long-term sustainability measures.”

As part of its Future26 strategy, Arla will also explore opportunities to begin exporting raw milk from the UK to supply Arla’s global supply chain and has begun trials to move milk to its European processing sites as a means to supply its growing international sales of sought-after dairy products and to improve the profitability of UK milk for its British and European farmer owners.

Peter Giørtz-Carlsen, executive vice president of Arla Foods Europe commented: “With farmer owners and production sites across Europe we have the opportunity to use the scale of our cooperative to create the most value from the milk produced on our farms. Demand for Arla dairy products is growing in Southeast Asia, the Middle East and West Africa, and so it is natural for us to explore how we can best utilise our European milk pool to meet that demand. This includes the milk from our British farmer owners.”

The group added that it will explore the need to recruit more milk from existing and potentially new farmers, including in the UK, as global demand for dairy over the next five years is estimated to continue to increase by 2 per cent year on year.