Arla UK breaks the £2bn revenue barrier

Arla Dairies
Arla Dairies
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DAIRY company Arla UK has seen its annual revenues smash the £2bn barrier as it helps Yorkshire farmers break into global markets.

Arla, which employs 1,000 people at sites across Yorkshire, plans to increase its sales in markets such as Africa and China where demand is growing.

Arla yesterday revealed that its UK revenue rose by 22 per cent to £2.2bn last year, after its performance was boosted by the recent merger with Milk Link.

Arla, which has 160 farmers in Yorkshire supplying it with milk, hopes to add another 50 or 60 farmers in the county to its supply chain this year.

Arla’s farmers in the UK have access to markets in more than 100 countries. Dairy industry figures believe that a forecasted surge in global demand for milk, as a result of emerging markets, can give the UK dairy industry a lift after years of decline.

Ash Amirahmadi, the Leeds-based vice president for milk and member services at Arla UK, said: “The farmers in Yorkshire who supply Arla with milk are, on average, between £15,000 and £20,000 a year better off than their neighbours who don’t supply milk to Arla.”

Mr Amirahmadi added: “Arla is on a growth curve. It is seen as an aspirational place to go and work.”

Arla UK, which is a subsidiary of a Danish co-operative, has also signed an exclusive partnership with Starbucks to supply 30 million litres of Cravendale milk to all its 700 stores in the UK and Northern Ireland each year.

An Arla spokesman said: “2013 marked another year of unprecedented activity for the UK business. Now the largest dairy company in the country with leading positions in milk, cheese, butter and spreads, the focus has been on maximising and extending these leads.”

In 2013, Arla UK negotiated the biggest cheese contract in its history. From April, the business will supply 30,000 tonnes of cheddar to Leeds-based supermarket chain Asda, increasing cheese production by 50 per cent.

In 2012, Arla Foods secured EU clearance to acquire the British co-operative Milk Link, which dramatically increased its scale.

The clearance was conditional on the divestment of Milk Link’s long-life milk processing facility in Devon, as Arla and Milk Link were the two leading suppliers of long-life milk in the UK.

Peter Lauritzen, the chief executive of Arla Foods UK, said yesterday: “The UK business is performing well. Arla UK has a compelling dairy offer and we are very much focused on growing our business and building on our number one position in fresh milk, butter and spreads as well as cheese.

“We focused on integrating the Milk Link business into Arla during 2013 and we are already seeing good commercial progress as a result of this.”

Last year, Arla Foods’ board of representatives voted for Arla Foods Milk Partnership (AFMP) farmers to become co-owners of Arla Foods amba. Arla said the co-operative status was proving attractive to farmers and businesses. In January, Arla revealed that it had added 1,300 farmer owners in Britain in the space of around a month. The latest recruits brought its total to 2,800 farmers in Britain.

According to Arla, around one in four of all British dairy farmers are now among its owners. Many European farmers are keen to access emerging markets, because the European dairy industry will see an end to production quotas in 2015.

Arla’s global business benefited from a “strong base” in its core markets in Europe in 2013, as well as a significant increase in sales within its growth markets outside the EU.

Globally, the demand for dairy products exceeded the supply of milk, which increased the value of milk, and the overall price of dairy products.

Peder Tuborgh, Arla Foods’ chief executive, said: “Milk has become a more valuable commodity globally, and that naturally has a positive effect on our results.

“With this tailwind we have driven our business forward in 2013 – with a strong efficient base in Europe, promising growth rates in Russia, China, the Middle East and Africa as well as a very profitable ingredients business in Arla Foods Ingredients.

“Our main focus is to create the best possible milk price for our owners, and the 2013 results confirm that we have the right strategy to achieve this.”

Production has started at Arla’s new dairy in Aylesbury which cost £150m. Arla has invested £500m in the UK business since 2007. Arla employs around 500 staff in Stourton, near Leeds, which is the site of its head office, dairy and national distribution centre.