Arla Foods plans to set up an “innovation centre” in Denmark in a bid to compete in a “tough” international dairy market.

The Lurpak and Castello brand owner will build the facility in the Danish city of Aarhus, where it already has an R&D site.

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Arla said it had “maximised the potential” of its two centres in Denmark and Sweden. It has decided to spend DKK270m on a single location.

“We are launching more new products than ever before, and the ability to generate original ideas and products for the consumers is increasingly crucial for the business. Arla is one of the world’s leading dairy companies, and we must be in a position to drive and lead dairy innovation on a global scale in order to increase the value of our products and create new business for Arla worldwide,” Paul Cornilllon, head of strategic innovation at Arla, said.

Construction will start in the spring and is expected to be completed by the third quarter of 2016. It will employ 120 people, including 65 transferred from the existing Aarhus site.

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“We want 10% of our annual revenue to come from new product launches. That is an essential part of our growth ambitions and our mission to create the highest possible value for the milk supplied by our co-operative owners,” Jais Valeur, head of global categories and operations at Arla, said.

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Click here for a recent interview with the head of Arla’s business in Russia, where it is aiming to triple sales.

And click here for an interview with Arla’s CFO in August, when the company announced its half-year results.