Arla Foods has said it will focus on growing its business organically in eight dairy categories and six regions as it works to build the value of its raw milk supply over the next five years.

The European dairy co-operative today (9 December) unveiled a new strategy for the next five years. “In Strategy 2020 we will focus even more on organic growth and growing our brands through innovation that focuses on what consumers and customers want and need. This will help us create the most profitable growth with our farmer owners’ milk,” CEO Peder Tuborgh said.

Arla has identified eight product categories on which it will concentrate its innovation: butters and spreads; spreadable cheese; speciality cheese; milk-based beverages; milk and milk powder; and yoghurt, mozzarella and ingredients. Growth in these categories will be pursued via the company’s “global brands” Arla, Lurpak and Castello. 

“The global dairy industry has developed by a speed seldom seen before, with millions of consumers changing their daily habits and preferences. We have analysed consumer needs and trends across dairy categories worldwide and have matched this with our own biggest strengths. This has led us to pursue eight specific categories where we feel Arla can grow a leading position globally or regionally. Our strategic innovation and best resources will be poured into these categories,” Tuborgh explained. 

The company also revealed it will concentrate on growing in Europe, the Middle East, China, Russia, Nigeria and the US. The dairy group intends to leverage its “strong position”  in northern Europe and the Middle East, while capitalising on the recent progress it has made in “new growth markets” such as China, sub-Saharan Africa and Russia.

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Tuborgh observed: “We have identified the markets in which Arla has the biggest potential to grow a long-term profitable business for our farmer owners. We are stepping up our efforts in the United States and Nigeria, while continuing to build on our positions in Europe, the Middle East and China. We also remain hopeful that Russia will re-open for business, at which point it will still be a very attractive market for Arla.”

The chief executive confirmed Arla is not pulling out of any markets outside its six key regions. However, innovation will be focused on those “lead” markets. “Over the coming five years we expect about half of our growth to come from outside the EU as we grow market shares while the other half will come from within the EU as we grow in key categories and add value through innovation,” Tuborgh continued. 

Arla’s milk supply, which stands at 14bn kilos, is expected to increase by a further 2.5bn kilos through to 2020, the co-operative said.