Strong sales for Arla brands soften blow of spiralling oil prices?

By staff reporter

- Last updated on GMT

Related tags: Arla food ingredients, Dairy, Milk, Arla foods, Arla uk

The UK branch of dairy processor and ingredients supplier Arla
Foods told investors yesterday that it is still on track to reach
revised profit targets for the year, boosted by its brands
performing well.

The owner of sweetener tagatose maker Arla Food Ingredients, Arla said the Anchor Spreadable and Lurpak brands had witnessed particularly strong on growth.

Arla Foods, along with Dairy Crest and Robert Wiseman Dairies, is one of Britain's top three dairy processors. The firm said in August that it had not been able to protect margins from the pressures of rising oil costs and utility bills.

But the company, due to post full-year figures on 30 November, said yesterday that it would meet revised expectations for the period, and that it had also put in place a range of measures to offset the pressures.

It did not provide further details.

Arla UK faces trouble despite doing the best in the past year's milk contract re-shuffle, gaining 120m litres overall and becoming sole milk supplier to Asda.

A report this month by Britain's Milk Development Council revealed that retailer profits for liquid milk have risen by a quarter in 10 years, growing more rapidly since 2003. Processor margins, in comparison, have fallen.

The MDC said dairy products were the second biggest sellers for UK supermarkets, generating sales worth £7.8bn. This shows that dairy has become a big profit earner for retailers.

The report highlighted that UK sales for higher value branded milk grew 23 per cent between 2003 and 2004, while branded cheese went up 11 per cent.

Britain's top three processors can benefit by tapping into this trend, although the MDC warned that the UK's added value sector was still behind that of other European dairy industries.

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