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Arla Investing Millions in Production

jug and a glass half filled with milk with sunflowers in the background

Big things are certainly in the air for dairy giant Arla, who have announced plans to invest hundreds of millions in their production during 2018.

Out of their £460 million spend planned for 2018, £72 million will be spent solely in the UK – representing a lot of expansion and new opportunities.

Shift in priorities

It seems that Arla have decided to shift their priorities towards areas of the business that they think will be more profitable in years to come. They have chosen their lactose-free dairy brand, Lactofree, as well as eco-friendly packaging initiatives as key areas for growth. Production will also see a large percentage of the investment, ensuring that they can meet growing demands.

brown cow in a field

The UK is Arla’s largest single market, with 12 sites already established. 10 of those 12 will see upgrades as part of the overall investment, with some receiving more than others. £33.6 million has already been set aside for their site in Aylesbury, which is a carbon net zero facility. There, they plan to create a home for the Lactofree brand production.

Lactofree is currently imported to the UK from production sites in Denmark and Germany, but the new move will mean it is made domestically instead. Milk from UK farmers is used, mainly in the south East and the Midlands, to create products in the facility at the current moment. A spokeswoman said the investment will create food manufacturing jobs, though they were not able to provide a figure just yet.

Demand for lactose-free products is increasing in the UK, and Arla already have experience with growing demand in Scandinavia to bring with them. The site will also be producing new flexible eco-pouches on their packaging lines, although the project is at such an early stage that the pouches have not yet been developed.

A green drive

Arla has already invested plenty of time and money in creating eco-friendly packaging materials across previous ranges. They have made commitments that they will only use 100% recycled plastic by 2020, with the exception of 50% recycled plastic in their milk bottles. This is just the latest in many moves towards a more sustainable business which is kind to the environment.

As for the Lockerbie plant in Scotland, £5.5 million has been allocated to upgrade the processing facilities. This takes their Scottish investments over recent years to more than £44 million. Part of that spend was on creating an anaerobic digester to offset their plant’s carbon footprint as well as on creating new food jobs.

“Arla is the biggest dairy company in the UK, owned by 11,200 farmers across Europe,” said Managing Director of Arla Foods UK, Tomas Pietrangeli. “This investment is almost double the investment of last year and, with the exception of building the Aylesbury dairy, it is the biggest annual investment for Arla in the UK. While milk prices remain volatile and Brexit brings both uncertainty and opportunity, Arla farmers in the UK and across Europe are committed to continually investing in our UK business to maintain pace with the demand for nature’s original superfood, and the consumer choice it creates.”

The rest of the UK spend will be shared between the Melton Mowbray, Llandyrnog, Malpas, Oakthorpe, Stourton, Settle, Oswestry and Trevarrian sites.

As for the remaining money in the £460 million global investment, it will be split over projects outside of Europe, attempting to grow sales in regions such as the Middle East, North Africa, China, Sub-Saharan Africa, and the US.

Interestingly, £13 million of their spend has been allocated specifically towards what they call the protection of the long-term future of the planet.