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Dairy giant Arla Foods in £243M cash injection

By Rod Addy+

03-Feb-2014
Last updated on 03-Feb-2014 at 18:06 GMT

Arla's 2014 investments include £9M for its Oswestry cheese packaging facility
Arla's 2014 investments include £9M for its Oswestry cheese packaging facility

Arla Foods has pledged to invest up to £243M in expanding global production.

The dairy giant said it planned to focus on exports to non-EU markets for growth, aiming to double sales through this channel by 2017.

Announcing the move today (February 3), Arla said the cash would be pumped into “new and ongoing dairy expansions” and efforts to make its supply chain greener.

“This year we are increasing our investments to dairies that contribute to our export out of Europe,” said vice-ceo of Arla Foods Povl Krogsgaard. “Our sales on the growth markets outside the EU are growing at a fast pace and we must prepare ourselves to meet the rapidly growing demand in years to come.

“In Arla we are determined to create good growth, and we are therefore investing almost £14M in projects that will make our production chain even more environmentally friendly.”

Slash emissions

The company aims to slash greenhouse gas emissions by 25% by 2020 and said it would be securing new heating pumps and water-saving equipment to help meet this target.

Arla’s investments in environmental improvements are expected to reduce the group’s overall energy consumption in production by 2.3% in 2014. That would be equivalent to a reduction of 62,115MWh (or the same as the annual energy consumption of approximately 13,800 standard households), it said.

In addition, the company said almost £83M would be invested in production for strategic growth markets outside the EU – Russia, China, the Middle East and Africa.

The goal here would be to increase profitability and create higher earnings for Arla’s cooperative members in the long term. 

New lactose production

The largest single investment in 2014 would be approximately £58M for the ongoing construction of a new lactose production site near Norre Vium in Denmark, said the firm.

The site would produce value-added lactose ingredients based on whey from Arla’s nearby cheese production, it said.

These ingredients would be used for child nutrition products and other categories and sold to the food industry globally by Arla’s subsidiary Arla Foods Ingredients, amid aims to double the size of that business by 2017.

“The new lactose site is a very important investment for us,” said Krogsgaard. “One of our most profitable business areas is whey-based ingredients for the global food industry, and that business must be doubled by 2017.

“The new lactose site will produce high-quality ingredients for child nutrition products that are in high demand especially in Asia. It will contribute both to a profitable export and positively to the milk price of our cooperative members.”

Significant 2014 investments

According to Arla, other examples of significant 2014 investments would be:

  • Almost £9M at Arla’s site in Oswestry, UK, where a new cheese packaging facility will be constructed.
  • Almost £14M at Pronsfeld dairy in Germany, which exports products such as UHT milk and milk powder to Asia and Africa.
  • Over £10M at Upahl, Germany where the production of quark is to be expanded.
  • Over £7M at Holstebro Flødeost in Denmark, where a new packaging line for Buko cream cheese is to be built.
  • Over £4M at Falkenberg dairy in Sweden, which will re-open as a cottage cheese dairy (in total this investment will amount to over £16M now and 2016).