Arla Foods, which employs 680 staff in Leeds, faced inflationary pressures over first half of year

However, Mr Tuborg said that Arla had still managed to protect its relative market shares against its competitors, and secure group earnings as planned.

Net revenue for Arla Foods UK, which employs around 680 staff at its operations in Stourton, near Leeds, in the first half of 2023 was £1.37bn, a growth of 16.9 per cent compared with the same period in 2022.

Jonathan Dixon, senior VP of sales at Arla Foods UK, told The Yorkshire Post that the results were in line with expectations and Arla was continuing to work with all stakeholders to develop its sustainability policies.

In a statement to accompany the results, he said: “During the first half of 2023, we continued to see inflationary pressure resulting in consumers moving towards discount channels and private label products.

"However, we have started to see our brand performance improve towards the end of the first half year due to significant investment in our brands and our continued innovation in the dairy aisle.

"This focus on growing our branded business in the short and long-term is already seeing positive growth for our Starbucks and Arla Protein brands, and the improved performance across our brands is sustaining as we now have moved into the second half of the year.”

In “volatile market conditions” Arla’s foodservice business in the UK experienced negative volume growth of -1.8 per cent, compared to 19.0 per cent growth in the first half of 2022, where the surge in demand was due to Covid-19 restrictions easing.

Arla said it expects to see positive growth in its UK foodservice business in the second half of the year.

In 2022, Arla introduced its new sustainability incentive model as part of a strategy to reward and accelerate Arla farmer owners’ implementation of climate and sustainability initiatives on farms.

The statement added: “Throughout the first half of 2023, Arla farmers have familiarised themselves with the new science-based reward system.

"By June, 7,300 or 94 per cent of Arla’s farmer owners had submitted their annual climate check data and uploaded almost 30,000 documents to register sustainability activities such as feeding optimisation, manure handling, energy optimisation and renewable electricity.”

While Arla expects inflation to soften, management believe commodity markets will continue to face uncertainty in the coming half year.

In a statement to accompany the results, Mr Tuborgh added: “We anticipate that inflation and its influence on consumer patterns will continue to mark the remaining part of 2023, putting pressure on branded volumes in most markets.

His statement continued: "However, we expect an increase in the underlying category growth to contribute to branded growth slowly picking up again.”