Arla Foods Amba eyes further growth with £460 million global investment in 2018, with £72 million UK spend

The farmer-owned dairy cooperative Arla Foods has announced a plan to invest almost half a billion pounds (€527 million) in 2018 as the company continues to deliver on its 2020 growth ambition¹.

The decision to significantly increase the investments of the company was approved at a meeting in London this week by Arla Foods’ board of directors, which consists mainly of elected farmer owners. Arla Foods will invest in new, expanded and improved production capacity as well as innovative technology.

The Chair of Arla Foods, Åke Hantoft, underlines that all investments by Arla Foods are made to secure long-term growth and profit opportunities for the company’s 11,200 farmer owners across Europe: “Arla has a history of good investments for sustained growth. The board of directors has decided to increase our investments with this plan, because we have identified new projects and investments with short and long term potential for significant return. The business growth these investments will create for our company will generate growth opportunities for our farmer owners. We see these investments as essential to the future of our business.”

Having grown the business by 50 per cent in the last decade, Arla, which now operates in 120 countries worldwide is focusing its investment in four key areas:

• Meeting the growing demand for dairy
• Healthy and natural products that match consumer lifestyles
• Leading the way in Whey
• Sustainable food production that considers the future of our planet

UK investment

£72 million (€82 million) of the investment will be spent in the UK in 2018, a clear sign of Arla’s commitment to dairy production across the UK.

In total, ten of Arla’s twelve sites across the UK will receive investment for upgrades. As Arla’s biggest single market, the company’s economic footprint in the UK is valued at more than £6 billion in Gross Value Added (GVA), equivalent to 0.52 per cent of the entire business economy and 0.33 per cent of UK GDP².

Arla’s carbon net zero site in Aylesbury will see the biggest proportion of UK spend with an investment of £33.6 million (€38.4 million) as it becomes the UK home to the production of Arla’s Lactose free dairy products using milk from UK farmers in the south east and the midlands. Having led the way in Lactose free dairy production across Europe, Arla considers the UK a key market for Lactose free products and will use its experience in Scandinavian markets to meet the increasing UK demand.

The investment in Aylesbury will also provide new facilities for the production of new product packaging using flexible pouches. The commitment of financial investment for the diversification of its packaging materials signals a clear move from Arla to explore alternatives to plastic. As a company which has already committed to using 100 per cent recyclable plastic by 2020 and 50 per cent recycled plastic in its plastic milk bottles, the investment into emerging packaging is further evidence of Arla’s commitment to sustainable business.

£5.5 million (€6.34 million) will be used to upgrade processing facilities at Arla’s Lockerbie plant in Scotland. The figure takes investment in Scotland in recent years to over £44 million which included the installation of an anaerobic digester to offset Lockerbie’s carbon footprint. Continued investment is further evidence of the strategic importance of Arla’s site in Scotland and its position as one of the most advanced dairy sites in the region.

The remaindering £32.5 million (€37.2 million) will be split across Arla’s sites in Melton Mowbray, Llandyrnog, Malpas, Oakthorpe, Stourton, Settle, Oswestry and Trevarrian. The figure also includes non-site specific investments which will enable Arla continue to drive growth for the farmers which own it and capitalise on increasing demand for dairy.

Tomas Pietrangeli, Managing Director, Arla Foods UK, comments: “Arla is the biggest dairy company in the UK, owned by 11,200 farmers across Europe. This investment is almost double the investment of last year and, with the exception of building the Aylesbury dairy, it is the biggest annual investment for Arla in the UK. While milk prices remain volatile and Brexit brings both uncertainty and opportunity, Arla farmers in the UK and across Europe are committed to continually investing in our UK business to maintain pace with the demand for nature’s original superfood, and the consumer choice it creates.”

European and Global investment

The rest of the £460 million (€527 million)investment enables Arla Foods to take advantage of wider growth opportunities on behalf of its farmer owners as dairy consumption worldwide grows faster than it ever has.

50 per cent of the investments in 2018 are targeted projects aimed at growing Arla Foods’ sales outside Europe, where the company’s fastest growing strategic growth markets are Middle East and North Africa, China and Southeast Asia, Sub-Saharan Africa, and the United States.

Arla Foods Ingredients is a recipient of large investments by its parent company seeing a £87.5 million (€100 million) investment in new, groundbreaking technology and capacity expansions as it continues to lead the way in high-quality value-added whey protein ingredients for food industry customers globally.

In line with the significant targets on sustainability set by Arla Foods in its Good Growth 2020 strategy, it will also supports a £13 million (€15 million) across 46 projects to protect the long term future of our planet.

Notes to editors:

• Read more about Arla Foods’ strategy, Good Growth 2020, at www.arla.com
• ¹ Arla Foods Amba2020 growth ambition
• ² Arla Foods and its impact in the UK 2017: carried out by independent economics consultancy Centre for Economics and Business Research (Cebr),
• Conversion rates: All future UK Investment is based on a euro to Sterling conversion rate of 0.875 and rounded to the nearest million
• 2018 investment in other countries: 266 million Euro in Denmark, 78 million in Sweden and 65 million in Germany and 36 million for production in other countries. Total 527 million euro.

Arla Foods is a global dairy company and co-operative owned by 11,200 dairy farmers with circa 2,500 of whom are British.

Dating back to 1881, Arla’s purpose is to secure the highest value for its farmers’ milk, while creating opportunities for their growth. With production facilities in 11 countries and sales offices in a further 30, Arla is the world’s fifth largest dairy company and largest supplier of organic dairy products. Arla has a total of more than 18,000 colleagues and its products are sold under the well-known brands Arla®, Lurpak® and Castello® in more than 100 countries.

Arla Foods UK is the largest dairy company in the country and is home to leading dairy brands Anchor®, Arla Cravendale®, and Arla Lactofree® with a turnover of €2.9 billion. The UK is largest market within the Europe Zone, contributing 35% of the zone’s turnover and also comprises 25% of the Group revenue.

As well as being a leading supplier of fresh milk, number one in butter, spreads and cream, Arla is the UK’s largest cheese manufacturer. It has also built the world’s largest fresh milk facility located at Aylesbury that later this year will become the first net zero carbon site of its kind. The UK business has a team of approximately 3,500 colleagues located at its dairies, creameries, distribution centres and head office.