Dairy giant Arla Foods today (16 November) hinted that it is looking at cutting costs in select parts of its business – despite news of “significant” investment in the UK.
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Arla’s board of directors is meeting this week to start talks on setting the group’s budgets for 2010 and, following a year in which the company slashed costs by DKK1bn (US$201.2m), more cuts could be on the cards.
An Arla spokesperson told just-food that the Lurpak butter maker could look to reduce its spending in certain parts its operations.
She refused, however, to be drawn on any specific plans for cuts – or whether the group’s totoal budget would fall in 2010 as it had in 2009. A final decision on Arla’s budgets would be made early next year, she said.
Arla, which also makes Castello cheese and Cravendale milk, will also make a final decision on the precise location of its planned new fresh milk dairy in the UK in the first quarter of 2010.
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By GlobalDataEarlier today, the group announced that it would build the world’s largest fresh milk dairy near London. The site, which will have a capacity of 1bn kg of milk, will be operational by 2012 and create around 500 jobs.
The move comes after a year in which Arla has restructured its business across Europe, with scores of jobs affected.
However, the spokesperson said the London investment was part of plans announced by Arla last autumn to revamp its entire global operations, in which the UK formed part of the company’s “core” markets.
“We introduced the strategy towards the end of 2008 when the economy started to freeze, which even accelerated in the first quarter of 2009. However, that strategy was a way forward for us and we had to stick to our plans, even if they maybe did not happen quickly for us,” she said.
“The British market has always been extremely important for us. Britain is a nation of milk drinkers [and] we feel we have a very good understanding of retailers and consumers,” the spokesperson added.
She refused to be drawn, however, on whether the construction of a mega dairy on the outskirts of London would put Arla’s other facilities in the UK or elsewhere in Europe under threat. “We are bringing capacity into the market [but] we think this [investment] is going to create some growth in the British market,” she said.
