Arla sees flagship brands drive growth, raises milk price

29 Aug 2017

Arla Foods amba, the farmer-owned dairy company, has released its half-year results for 2017, announcing rising revenue driven by strong growth amongst its flagship brands, especially its range of Arla branded products.

Arla sees flagship brands drive growth, raises milk price

Arla Foods amba, the farmer-owned dairy company, has released its half-year results for 2017, announcing rising revenue driven by strong growth amongst its flagship brands, especially its range of Arla branded products.

The announcement comes as the farmer-owned dairy company also announces a rise in the monthly milk price paid to farmers equating to an upward movement of 0.81 pence, taking the UK standard litre price for conventional milk to 30.79 pence. This has contributed to a total increase of 42 per cent over the last 12 months.

Underpinning the UK growth was a 10 per cent increase in net revenue from brands including Lurpak and Castello, with the Arla brand seeing particularly strong revenue growth of 15 per cent.This was driven by high performance in the yogurt category, with Arla Protein and Arla skyr seeing revenue rises of 59 per cent and 82 per cent respectively.

These results, said the company, reflect an exciting year so far for Arla in the UK where it has pursued its plan to invest £37.5m in sites during the year, launched Arla Organic Free Range Milk, extended its Arla Protein range with the launch of Arla Protein Pouches and, in the milk aisle, enjoyed success in its grocery retailer own-label business, agreeing a new three-year exclusive contract with Morrisons, set to begin in March 2018.

A combination of investment and innovation helped to ensure Arla branded products recorded the largest growth of any UK brand on a list of 100 compiled by The Grocer in March.

Volume driven revenue has decreased in the UK by four-and-a-half per cent as the company took significant steps to drive its profitable growth, partnering with its customers to drive long term strategic plans and optimise its product portfolio.

“As the global dairy market improved, we have responded to the sustained rally in global dairy prices while continually improving our product mix across key markets,” said Peder Tuborgh, CEO, Arla Foods. “As a result, we have increased the on-account milk price to the farmers who own our company by 42 per cent over the last twelve months. They needed that, as the past two-and-a half years have been tough for most dairy farmers around the world. Yet despite that tough backdrop, we have continued to invest, innovate and grow and that growth is making an important contribution not just to our farmer owners, but to the overall resilience of the industry.”

“We’ve seen a significant increase in our milk price over the last 12 months – a welcome boost for our farmer owners – and our mission remains to secure the highest possible value for their milk, predominantly through the development of our branded portfolio,” said Tomas Pietrangeli, Managing Director, Arla Foods UK. “The strong growth of the Arla, Lurpak and Castello brands shows that we were right to focus on these as part of our UK Strategy 2020.”

“This success is likely to be welcomed given the wider turbulence of the last six months. We are entering a defining time for British dairy as the UK finds its place outside the EU. Arla will continue to work in the coming months and years on generating greater returns for our farmer owners and being a champion of British dairy at a time when it needs one the most.”

The UK market as a whole grew four per cent in the first half of 2017, driven by strong growth from each of Arla’s strategic brands, with Arla’s focus on its three strategic brands generating a 10 per cent increase.