Dairy firm Arla ups investments to meet emerging market demand

COPENHAGEN, Jan 31 (Reuters) – Denmark-based dairy company Arla Foods aims to increase its investments this year by almost 60 percent to meet growing global demand for dairy products and consumers’ shift to healthier options.

Arla, one of the world’s largest dairy firms competing with food giants like Danone and Nestle, said on Wednesday it would hike investments to a record 527 million euros ($655.90 million) in 2018 from 335 million last year.

“In South-East Asia and Sub-Saharan Africa, disposable income is increasing and families are increasingly demanding nutritious dairy products,” Arla said in a statement.

To meet this growing demand, it is investing 190 million euros in the coming three years to expand a production site in Germany, which makes milk powder and ultra-pasteurized (UHT) milk for markets outside Europe.

It is also investing in a new production site for lactose free products in Britain, it said.

Arla, a co-operative owned by 11,200 farmers in Denmark, Sweden, Germany, Britain, Luxembourg, the Netherlands and Belgium, this year expects to put half of the total investments into projects outside Europe, in growing markets like the Middle East, North Africa, China, South-East Asia, Sub-Saharan Africa and the Unites States.

It would also invest in its production facilities in Denmark, Britain, Germany and Sweden, it said.

Aiming to improve profits for its owners and safeguard against fluctuating milk prices, Arla launched a five-year strategy in 2015 focusing on moving milk from a bulk commodity towards producing branded foods and ingredients under brands such as Arla, Castello and Lurpak. ($1 = 0.8035 euros) (Reporting by Stine Jacobsen; Editing by Jacob Gronholt-Pedersen and Terje Solsvik)

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