Danish dairy giant Arla Foods has announced that it is to close its Gefleortens Dairy business in Sweden.

Some 45 employees are affected by the decision.

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Swedish co-op Gefleortens was merged into the Arla business in 2017. At the time Arla, a cooperative itself, said it would keep the dairy in Gavle open.

However, it has now decided to close the business, blaming “the financial challenges that Gefleortens Dairy has faced for a long time and which Arla has failed to turn around”.

Patrik Hansson, Arla’s Sweden manager, said: “The challenges for Gefleorten’s Dairy have been tough for a long time and we have not been able to turn them around. I can say from my heart that it was a bleak message to give. However, I am glad that we have secured a long-term sale where Arla retrieves all the milk the farms produce.

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“The management at Gefleortens Dairy has led an efficiency programme where both the number of products and the number of employees have been reduced. But unfortunately, we have not been able to increase sales from Gefleortens. In order to make production profitable, very large investments would be required, which would not generate a higher milk price for the owners.”

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Arla said the challenges in the dairy market are great with “increased competition and demand for new types of food”.

It added: “Today’s dairy market requires specialised dairy products, such as lactose-free products, which Gefleortens cannot produce. Investments in a new machinery park would require very large investments. As the volume of Gefleortens Dairy is small, the cost situation is too high in the competition that prevails.”

The Gefleortens brand will be retained, although the milk will be packaged in another dairy together with milk from other farms.