Arla Foods will invest €527 million in 2018 as the dairy co-operative aims to meet growing global demand for its products.
The decision to significantly increase investments was approved at a meeting in London this week by Arla Foods’ board of directors, which consists mainly of elected farmer owners. The company will invest in expanded and improved production capacity as well as innovative technology.
Having grown the business by 50% in the last decade, Arla, which now operates in 120 countries, is focusing its investment in four key areas: healthy and natural products that match consumer lifestyles, leading the market in whey, sustainable food production, and meeting growing demand for dairy.
A total of €82 million of the investment will be spent in the UK in 2018. Ten of Arla’s 12 sites in the country will receive investment for upgrades. Arla said that as its biggest market, “the company’s economic footprint in the UK is valued at more than £6 billion in gross value added”.
Arla’s carbon net zero site in Aylesbury will see the biggest proportion of UK spend with an investment of €38.4 million as it becomes the UK home to the production of Arla’s lactose-free dairy products. The investment in Aylesbury will also provide new facilities for the production of new product packaging using flexible pouches.
At its Lockerbie plant in Scotland, Arla will spend €6.3 million to upgrade processing facilities. The remaining €37.2 million in the UK will be split across Arla’s sites in Melton Mowbray, Llandyrnog, Malpas, Oakthorpe, Stourton, Settle, Oswestry and Trevarrian.
Arla Foods UK managing director Tomas Pietrangeli said: “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.”
Meanwhile, Arla said that remaining €527 million investment will enable it to “take advantage of wider growth opportunities on behalf of its farmer owners as dairy consumption worldwide grows faster than it ever has”.
Around 50% 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 the Middle East and North Africa, China and Southeast Asia, Sub-Saharan Africa, and the US.
Arla Foods Ingredients is a recipient of large investments by its parent company, seeing a €100 million investment in new technology and capacity expansions.
Åke Hantoft, Arla Foods chair, said: “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.”
Last week, Arla announced it will close its dairy facility in Brabrand, Denmark, in 2019 and move production to other facilities in Denmark, Holland and Germany.
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