Arla invests in milk-drink production to meet growing demand

UK – Arla Foods is investing DKr20m (US$2.9m) into its factory in Esbjerg, Denmark, to support the growth of its Starbucks and Cocio milk drinks in Europe, the Middle East, and Africa (EMEA).

This investment will cover new buildings, processing equipment, and maintenance to accommodate the rising demand for these products.

Since 2010, Arla has held a license to manufacture and distribute Starbucks ready-to-drink (RTD) coffee products in the EMEA region. In 2018 this partnership was renewed with a 21-year deal, reflecting the collaboration’s continued success and growth potential.

Arla’s 2023 annual report highlights a 15.7% increase in Starbucks RTD sales volumes and a 13.7% rise in revenue, driven mainly by the European market. The company distributes these products across more than 50 markets in the EMEA region.

In addition to Starbucks RTD products, Arla’s investment aims to bolster the Cocio Chokolademælk brand, which Arla fully acquired in 2008 after initially purchasing a 50% share in 2002.

The Cocio brand saw a 19.5% increase in revenue in 2023, amounting to DKr645.9m. Denmark remains Cocio’s largest market, but the brand also found a successful niche market in China, rapidly becoming its second-largest market in 2023.

Arla’s investment in Esbjerg is part of a broader strategy to expand its production capabilities and cater to the growing consumer demand for high-quality milk drinks.

This move aligns with Arla’s plans to invest further in its UK manufacturing sites, which were announced in May. The co-op has earmarked significant capital expenditure for its dairies and creameries in Lockerbie, Stourton, Aylesbury, and Westbury.

However, following a review of its Tuxford & Tebbutt site in January 2024, the company ceased production at the Melton Mowbray Creamery in the UK.

Despite efforts to secure a buyer, production at the historic facility, which has been producing Stilton since 1780 and employs 60 people, will be halted. Fran Ball, VP of production for Arla, emphasized that the company’s priority is to support affected employees during this challenging period.

This closure comes despite Arla’s commitment to investing more than £300m into five of its UK sites, demonstrating its broader strategy to enhance its production capabilities while navigating market challenges.

The investments in Esbjerg and the UK reflect Arla’s ongoing efforts to meet growing consumer demand for milk drinks and maintain its competitive edge in the global dairy market.

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