Swedish dairy giant Arla has presented an ambitious strategy for future growth. This sets out a broad outline of how the business will be developed over the next decade.
The strategy was developed at the recent board of representatives meeting, where proposal for growth were presented. The expansion of EU and agricultural reform were key topics.
Other points of discussion included recent developments in a retail sector dominated by few, but large, international chains. "As we worked on the vision the need for actively defending our position as Europe's leading dairy group became increasingly clear," said åke Modig, Arla Foods' deputy managing director.
"We are big in Sweden and Denmark, but a smaller player in other markets. To develop and maintain Arla Foods' position as market leader, we must aim for growth."
åke Modig says that he is aware that the quest for growth can be difficult for co-operative members to understand during a period of strongly declining milk prices.
"However, at a time when raw material prices are also falling it is even more important to search for solutions which will strengthen our milk price in the long-term," he said.
Arla Foods' growth will be achieved through a combination of organic growth, acquisitions and mergers. Dairy companies in Northern Europe and the Nordic countries have been identified as potential future partners.
Members of the group's senior management referred to the merger between Arla and MD Foods, which was motivated by external factors discussed at the recent meeting. Currency fluctuations in relation to, in particular, sterling and the US dollar and the EU's agricultural reform are also beginning to have an immediate and direct impact on Arla Foods' operations, the company said.
"We believe that margins in the domestic market are likely to decline next year," said Modig. "This means that export losses cannot be compensated for in the domestic market. This is why we're currently examining ways of cutting costs across the group."