UK households continue to have big taste for Arla’s trusted brands
Arla Foods UK reports revenue growth of 3 per cent in the first half of 2021 with a net revenue of £1.1bn (€1.2bn). The company continued to navigate the operational challenges presented by Covid-19, and saw retail and e-commerce sales of its branded products continue to grow as people in Britain maintained a higher level of in-home consumption in the first part of the year.
However, in the second half of the year the inflationary environment created by Covid-19 is expected to challenge the cooperative and its farmer owners with increasing production costs due to higher prices on fuel, energy, packaging and feed.
As a farmer-owned dairy cooperative, Arla Foods is always working to add as much value to the milk supplied by its farmers by building strong brands that offer consumers quality, taste and healthy inspiration. Consequently, one key strategic focus for Arla in the UK is to continue to grow its branded share of the business.
In the first half of 2021, Arla UK achieved an overall Strategic Branded Revenue Growth of 4.6 per cent compared to the first half of 2020, driven by popular brands like Arla Cravendale® which grew 10 per cent, Arla Protein® milk at 34 per cent, and Arla B.O.B. at 21 per cent. Across the full Arla® brand range the total average growth was 13 per cent.
Ash Amirahmadi, Managing Director of Arla Foods UK says, “Demand for dairy has remained strong over the first half of 2021 as people continued to turn to our household Arla® branded product range as they cooked and dined at home more. Whilst we do expect our brands to continue to perform well in the market, we will also see a different second half of the year with some retail demand being replaced by out-of-home consumption. ”
Compared to the first half of 2020, Arla UK’s foodservice business grew 21 per cent in the first half of 2021 as restaurants, canteens and pubs cautiously began to re-open in the spring.
Arla’s stable of licensed brands also performed well, led by its ready-to-drink Starbucks® portfolio which grew 42 per cent in volume in the UK.
Continued pursuit of carbon net zero dairy
In the first half of 2021, the first results of Arla’s Climate Checks – one of the world’s largest datasets on dairy production – showed that Arla’s farmer owners are among the most climate efficient in the world. The data will help Arla’s farmers continue the journey to meet its science based targets of a 30 per cent emissions reduction per kg of milk at farm-level by 2030, a first step on its journey to carbon net zero.
In the first half of the year, Arla UK also completed the relocation of its Arla Lactofree® milk production from Denmark and Sweden to its site in Settle, Yorkshire, creating 50 new jobs as part of a new £25 million investment.
Arla increases guidance for full year
Total Arla Group revenue increased slightly by 1.2 percent to EUR 5.441 billion in the first half of the year. The company is adjusting its expectations for full year revenue for 2021 to the range of EUR 10.6 billion to EUR 11.0 billion.
The cooperative’s performance price – which measures the value Arla creates per kilogram of owner milk – was 38.6 EURcent compared to 37.0 EURcent first half of 2020.
Peder Tuborgh, CEO of Arla Group, comments: “The outlook remains volatile and whilst our recipe for managing Covid-19 has been successful, we must now manage the transition to the next normal just as well. We expect to see a re-balancing of demand between retail and foodservice which will bring our retail sales to a more familiar level and soften our branded growth and the broad inflationary environment will continue to challenge our company and farmer owners.”