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Arla Foods is investing more than €63 million to expand skyr and cottage cheese production in Germany and Sweden, as demand for high-protein dairy products continues to grow across Europe.
The farmer-owned dairy cooperative is investing €35 million at its Upahl site in Germany to increase skyr production capacity, while a further €28.3 million will be invested in cottage cheese production and site modernisation at its Falkenberg dairy in Sweden.
Arla said the investments will help it respond to growing demand across European markets while creating greater value from its farmer owners’ milk.
The company reported that skyr volumes across its European markets have increased by more than 33% over the past three years, while cottage cheese volumes have risen by 25% over the same period.
Peder Tuborgh, CEO of Arla Foods, said: “Consumer preferences continue to evolve, and we see growing demand for products with high-protein combined with convenience and great taste. Dairy products such as skyr and cottage cheese continue to resonate with consumers across many markets, and these investments reflect our ambition to make these products available to more people.”
The €35 million investment at Upahl will add skyr production capacity as part of Arla’s wider European skyr network.
The company said skyr has become one of the fastest-growing dairy categories across Europe, as consumers seek protein-rich products that can fit into everyday eating occasions.
The investment follows €51 million that Arla has invested since 2023 to increase skyr capacity and efficiency across its dairies in Denmark, Germany and Sweden.
The new Upahl investment is expected to support increased production and network efficiency, with commercial production scheduled to begin in the second half of 2028.
Arla is also expanding its cottage cheese operations at Falkenberg, which it describes as Europe’s largest cottage cheese production site.
The €28.3 million investment will increase production capacity and modernise the Swedish facility, with the work expected to be completed gradually through 2028.
Arla said cottage cheese has benefited from increased consumer interest in protein-rich foods, with the category increasingly being used across meals and snacks due to its versatility and nutritional profile.
Market growth over the past year has ranged from 13% in Sweden to 37% in Denmark and the UK, and 38% in the Netherlands, according to Arla.
The company said it is the largest branded supplier of cottage cheese across its European markets, with a particularly strong presence in Sweden and Denmark.
The Falkenberg investment follows €34 million invested in Swedish cottage cheese production since 2025. Arla has also expanded its international cottage cheese business through the acquisition of Australian producer Brancourts earlier this year
Arla said the investments reflect its expectation that demand for skyr and cottage cheese will continue to grow as consumers seek products combining protein, convenience and taste.
“Together, these investments ensure that we can continue meeting growing consumer demand, supporting our customers and creating long-term value from our farmer owners’ milk. The growth we are seeing in skyr and cottage cheese gives us confidence in the long-term potential of these categories," Tuborgh said.
The investments form part of a wider push by dairy producers to increase capacity in categories benefiting from the growing consumer focus on protein and active lifestyles.
