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October 17, 2018

Dairy giant Arla launches direct-to-consumer business in UK

Arla Foods, the European dairy giant, has started selling directly to consumers in the UK.

Arla Foods, the European dairy giant, has started selling directly to consumers in the UK.

The private-label and branded dairy products supplier has launched a direct-to-consumer business offering organic infant formula and baby food to parents in what is its largest market by sales.

Arla has developed a range of infant formula, porridges and pouched baby food for sale directly from its own website and via Amazon.

The move also marks Arla’s entry into the infant-formula and baby-food categories in the UK. Arla already operates in these categories in its home market of Denmark and in China.

Steve Millard, the head of e-commerce and digital for Arla’s business in the UK, said a move into the direct-to-consumer channel was “way outside of our comfort zone” but he said the farmer-owned cooperative “simply can’t ignore” a part of the market that is “accelerating”.

Speaking at an industry conference in London today (16 October), Millard outlined four other reasons why Arla had launched the business.

“Data is the new oil. It’s the only channel where we can generally start to understand more about the consumer and own that relationship with them, so physically putting something in their hands that will drive engagement with our clients and brands will be a huge focus for us,” he told the Digital Commerce ’18 event convened by industry researchers IGD. 

“It’s [also] a channel where we are genuinely in control of our profit, so, assuming we can get the logistics and the supply chain wrapped up, it’s an area where we can be quite profitable and where we don’t have to rely on that retailer engagement. [Another] is the opportunity to leverage the growth of [Amazon] Marketplace. Amazon is growing incredibly quickly in the UK. Their reach is phenomenal. 

“And then a lot of the feedback from the research we did with our consumers, we were told by them that it makes a huge amount of sense if we have a branded store, that we offer something where we can surprise and delight them and offer a differentiated proposition of what we do within the retail space in the UK. It was an absolute no-brainer from our point of view that we’ve got into that space.”

Arla is offering stage-one and stage-two organic infant formula, aimed at parents feeding children from birth to aged 12 months. Looking at Amazon’s UK website at the time of writing, the products were on sale for GBP12 (US$15.82) for an 800g tin.

The direct-to-consumer range also includes four flavours of porridge and four variants of pouched baby food. The direct-to-consumer service is available across the UK, with Arla using DPD as its logistics provider.

Millard hinted Arla is looking to sell other products directly to consumers in the UK. “We don’t intend on just staying in ambient product,” he told the audience. 

The UK is not the first market in which Arla has launched a direct-to-consumer business. It has a cheese-focused unit in Denmark. Millard indicated Arla would look to launch the new, UK service in other countries, saying the company was “activating the direct-to-consumer business starting with the UK and rolling out to other markets”.

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