Arla Foods has pledged nearly $400m over the next 12 months to improve its environmental image and boost production of dairy products for export to its strategic growth markets.
The European dairy giant, owned by 12,000 farmers across Denmark, Sweden, the UK, Germany, Belgium, Luxembourg, yesterday announced plans to plough 2.2bn DKK ($398m, €295m) into 10 new and ongoing manufacturing expansions, and projects to reduce the environmental impact of its operations.
The manufacturing investment will support Arla's current five-year plan, Strategy 2017, which was designed to increase exports to Russia, China, the Middle East, and Africa - the company's strategic growth markets.
“This year we are increasing our investments to dairy sites that contribute to our export out of Europe,” said Arla Foods vice CEO, Poyl Krogsgaard.
“Our sales on the growth markets outside the EU are growing at a fast pace, and we must prepare ourselves to meet the rapidly growing demand in years to come.”
At 530m DKK ($96m, €71m), Arla's investment in the ongoing construction of a new lactose manufacturing site in Denmark will be its single largest in 2014.
“The new lactose site is a very important investment for us. One of our most profitable business areas is whey-based ingredients for the global food industry, and that business must be doubled by 2017,” said Krogsgaard.
“The new lactose site will produce high-quality ingredients for child nutrition products that are in high demand especially in Asia. It will contribute to a profitable export and contribute positively to the milk price of our cooperative members.”
Elsewhere, Arla Foods plans to invest 126m DKK ($23m, €17m) in its Pronsfield site in Germany, which exports products such as UHT milk and milk powder to markets in Asia and Africa, and 95m DKK ($17.2m, €12.7m) on the expansion of its quark manufacturing operations at its Upahl site in Germany.
It also plans to plough 81m DKK ($14.7m, €10.9m) into a new cheese packaging facility at Arla’s Oswestry, UK plant, 66m DKK ($12m, €8.8m) in a new packaging line for BUKO cream cheese at its Holstebro Flødeost plant in Denmark, and 42m DKK ($7.6m, €5.6m) in its Falkenberg dairy in Sweden, which will re-open as a cottage cheese manufacturing site.
Reduce energy consumption
The coop also plans to spend around 125m DKK ($22.6m, €16.75m) on making production at Arla’s 67 dairy sites worldwide more environmentally friendly.
“The target set in our climate strategy in Arla is to reduce our overall CO2 emission by 25% by 2020," said Krogsgaard.
"Our production plays a key role in the efforts to reach that target, and therefore we are investing in new state-of-the-art heating pumps and water-saving equipment. This will reduce our energy consumption and our emission of CO2," he added.