UPDATE: DENMARK: Arla Foods wants fifth of sales from emerging markets
By Chris Mercer | 11 January 2013
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Arla eyes emerging markets |
Arla Foods has told just-food its new strategic plan calls for it to double the proportion of dairy sales derived from emerging markets by 2017.
Arla said today (11 January) it has brought forward a new strategy designed to increase its presence in emerging markets up to 2017. The group expects the abolition of EU milk quotas in 2015 to lead to increased milk production, much of which cannot be swallowed by mature dairy markets in Europe.
The group has not given specific sales targets for the 2017 strategy, which will supercede a current plan to hit DKK75bn in sales by 2015.
However, speaking to just-food following the launch of the new strategy, an Arla spokesperson said: "By 2017 our strategic consumer business in Russia, China, Middle East & Africa plus global ingredients sales must make up 20% of our global revenue, compared to 10% today."
Arla said it plans to double global ingredients sales over the period, to DKK5bn (US$888m). "We have an opportunity to achieve profitable long-term positions in markets outside the EU," said Arla's chairman, Åke Hantoft.
When asked how the Danish dairy co-operative plans to measure profitability, the group spokesperson added: "Our aim is to pay a milk price to our cooperative owners which is 3-5% above our comparable competitors in Europe."
At the same time as seeking a greater presence in non-EU markets, Arla's 2017 document also recognises the need for DKK2.5bn in efficiency savings in Europe.
The spokesperson said it is "impossible to say at this point" whether this could lead to job losses via streamlined production.
But, he added: "The effeciency measures are part of our daily work to reduce cost and not necessarily focused on site closures. When commenting on an upcoming period as long as five years it is, however, impossible to rule anything out."
Sectors: Dairy, Emerging markets, Financials
Companies: Arla Foods
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UPDATE: DENMARK: Arla Foods wants fifth of sales from emerging markets
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With the end to EU dairy quotas in 2015, Arla Foods is likely to face an oversupply of raw milk. In a bid to preempt the problems that this would entail, the dairy cooperative has outlined plans of how to grow its business in emerging markets. However, in an increasingly crowded space, this could be easier said that done.
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