Arla thinking functional in global reshuffle

By Neil Merrett

- Last updated on GMT

Related tags: Arla, Milk

Arla Foods says that innovation towards healthier products and ingredients combined with a major pushes for its whey protein operations will dominate the future direction of its European and global expansion strategies.

The Scandinavia-based manufacturer and cooperative said that it was targeting brand consolidation and an expansion of the number of core European markets in order to compete with other dairy players that have also adopted new strategies.

The geographical push from the company is expected to be backed by moves to extend its presence in segments perceived to offer greater nutritional benefits such as whey ingredients and other value-added products.

Geographical shift

As a result of these new commitments, the group said that it would be expanding its activities in Germany and Poland to bring the markets in line with its core Swedish, Danish, Finnish and UK operations.

Outside of Western Europe, Arla claims that investment will also be stepped up in regards to Russia, the US and China, which were identified as ‘special growth areas’ amidst the 80 countries in which it is currently present.

Product devlopment

Aside from readdressing specific market focuses, the company said it was also focusing on overhauling the types of goods it will be producing as well.

On a broad level, the overhaul is expected to include attempts to double the group’s current global sales of whey protein products.

This drive will also be backed up by a 100 per cent increase in the co-op’s existing development budget, targeting both high growth areas such as dairy health, along with potential breakthroughs in product taste, Arla claims.

At the final product level, the company says it will market all products under thee global brands including Castello, Lurpack and a new label to be marketed as Arla.

Setting priorities

Peder Tuborgh, chief executive of Arla said the new strategy was ambitious in terms of meeting the goals, but reflected an attempt to better prioritise its operations worldwide in a difficult market for dairy products.

“We cannot do everything in all markets,”​ he stated. “We must be extremely strong in some international markets - but not everywhere and not in all categories.”

Development fear

However, Arla has not been alone in eyeing amendments to its operations in order to tackle the challenge of meeting local demand for added-value products.

In August, US-based cooperative Dairy Farmers of America (DFA) said it was forming a new combined ingredients division designed to sate international hunger for functional products.

While manufacturing ingredients for the company’s own branded goods and external processors is not a new strategy, DFA said that it hoped to specifically focus the new division on industry innovation in terms of product formulation.

The drive for new dairy use has not gone unnoticed by many across the industry.

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