Danish dairy heavyweight Arla Foods has announced it is to invest EUR500m (US$622.2m) this year to fund its growth plans.
The farmer-owned dairy cooperative said the extra investment cash, which will help it to deliver on its 2020 growth ambitions, was agreed on at a meeting in London this week.
It will invest in “new, expanded and improved” production capacity as well as “innovative technology”, with a focus on markets outside Europe.
Arla chairman Åke Hantoft said: “Arla has a history of good investments for sustained growth. The board of directors has decided to increase our investments with this plan, because we have identified new projects and investments with short and long-term potential for significant return.
“The business growth these investments will create for our company will generate growth opportunities for our farmer owners. We see these investments as essential to the future of our business.
Arla said it will focus its investment in four key areas: meeting the growing demand for dairy, healthy and natural products that match consumer lifestyles, “leading the way in whey” and sustainable food production that considers the future of the planet.
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The cooperative points out that while global milk production continues to be volatile, dairy consumption worldwide is growing faster than it ever has. As a result, 50% of the investments in 2018 are targeted projects aimed at growing Arla’s sales outside Europe, where the company’s most buoyant “strategic growth markets” are the Middle East and North Africa, China and south-east Asia, sub-Saharan Africa and the US.
Two thirds of this year’s spend will focus on increasing Arla’s European production capacity, with EUR266m being invested in Denmark, EUR82m in the UK, EUR78m in Sweden, EUR65m in Germany and EUR36m for production in other countries.
Arla CEO Peder Tuborgh added: “This investment plan is a growth plan aimed at expanding our positions in key dairy categories and geographic markets where Arla is already a key player. Our ambition is to create an even stronger foundation for our farmer owners and our future business growth.”
Arla will invest EUR56m of its investment to lay the foundations for the production of Lactofree products at its Aylesbury site in the UK and it plans to expand its production site in Pronsfeld, Germany that supplies milk powder and UHT milk for many of its strategic growth markets outside Europe.
In Sweden, a further EUR5m will be invested to add a whey processing capacity at Falkenberg dairy that can concentrate the whey from the site’s cottage cheese production and add more value through Arla Foods Ingredients.
It will also construct a large biogas facility at its dairy site in Nr. Vium, Denmark, which will supply heat for the production of milk powder.