News

Arla looks to triple business

2 Sep 2016

A sparkling milk and fruit drink, a milk and tea drink and an energy drink rich in protein are all part of Arla’s new ambition to triple its business outside standard liquid milk in the global beverage market.

A sparkling milk and fruit drink, a milk and tea drink and an energy drink rich in protein are all part of Arla’s new ambition to triple its business outside standard liquid milk in the global beverage market. Arla says it wants to challenge soft drinks with healthier milk-based alternatives.

One important focus in Arla’s ‘Good Growth 2020’ Strategy is to capture the opportunities within beverages with a portfolio that includes healthier alternatives based on milk and natural ingredients. The goal towards 2020 is to triple the revenue of milk-based beverages from €230m in 2015.

The global market for milk-based beverages is circa €100bn in annual retail sales value, according to Arla, which is the size of the global standard liquid milk market. However, the company says, it is growing much faster, especially outside Europe.

“By addressing the beverage market more strategically, we can double the size of our playing field for liquid milk products and capture significant growth opportunities for Arla. Through branded milk-based beverages we can create more value for our farmers,” said Hanne Søndergaard, executive vice president for global Marketing & Innovation in Arla.

Modern urban lifestyle has led to people across the world increasingly snacking and getting their nourishment out of home, Arla believes: mealtimes are blurring, more women are working and more people are living in bigger cities.

“We have a big opportunity to provide people with nourishment when they need it, based on the natural goodness of Arla milk. Our milk should not only be enjoyed from litre-sized packages bought in supermarkets, it should also be available as a tasty beverage on the go. We will expand our portfolio to include products that will nourish, fuel or refresh you - whenever and wherever you need it. This will create new sales opportunities for us in places such as convenience stores, petrol and train stations, gyms, workplaces, cafes, and bars, where we have little presence today,” said Søndergaard.

Within beverages, Arla says it has had success through its Cocio subsidiary and its cooperation with Starbucks coffee drinks. Recently, beverages such as Arla Protein and Arla Move with natural ingredients have been introduced.

Arla’s development areas

In markets, Arla says its 2020 ambition is to be the leading provider of milk-based beverages in Northern Europe and one of the leading European players in Asia, the Middle East and Northern Africa. The UK has been selected as the European test market in 2017 and it will receive, along with UAE and Singapore, further dedicated focus to develop a winning model for distribution, sales and marketing that can be rolled out in their respective regions.

In products and packaging, the current innovation focus for the company, it says, includes developing ambient beverages, in which milk, yogurt or whey is the main content. They can be flavoured, carbonated or with added specific benefits such as protein, fibres or grains, etc. However, the team will also have to think beyond dairy, Arla believes, for example by using milk, yogurt or whey as an ingredient in other popular beverages such as sports drinks, water, coffee, tea etc.

In channels and distribution, what the company describes as a “strategic be”t requires further extension of Arla’s existing sales and distribution outside traditional retail to make milk-based beverages a natural option in convenience stores, petrol and train stations, gyms, workplaces, cafes and bars.