Launching Strategy 2017, Arla said that it aims to double sales of ingredients to the food industry and shift its North European business from expansion to increased profitability and innovation.
The company will increase investment in marketing, distribution networks and cooperation with local partners in Russia, China and the Middle East & Africa between now and 2017. Arla has set a target to increase its sales in these markets from approximately 3.5 to 10 billion DKK.
”We now increase our focus on Russia, China and the Middle East & Africa region. Our export to these markets is growing rapidly, and we will work hard over the next five years to build on the massive potential that these markets hold for Arla’s products,” said Peder Tuborgh, Arla Foods’ chief executive.
Arla cited the abolition of EU milk quotas in 2015 as the main driver behind the company’s revised global strategy. Without EU quotas it is anticipated that Arla’s milk farmers will produce at least one billion kilos of milk more each year and that the extra milk will not be sold profitably in the territory characterised by stagnating growth.
“We have an opportunity to achieve profitable long-term positions in markets outside the EU, and therefore it is important that the strategy sends a clear signal to the organisation that we need to further develop our sales channels. Our dairy products need to reach many new consumers as these increased global sales will help to maintain a viable dairy business in northern Europe,” said Åke Hantoft, Arla's chair.
In recent years, Arla has strengthened its positions in its core markets in the UK, Sweden, Germany, Denmark, Finland, and the Netherlands. According to Strategy 2017, these markets must continue to be developed, but with more focus on refining activities, not primarily through expansion via mergers and acquisitions.
“Our company has grown and Arla has a lot of unutilised potential that our owners expect us to put to good use. We can do this by further advancing our relations with customers and consumers, offering more attractive products, and finding new ways to inspire our customers,” added Tuborgh.
“In terms of our retail customers, we wish to be the best partner for them – through the development of both our own brands and theirs. We also want to improve the development of successful products and sharing ideas across business units and national borders.”
One of the most profitable areas within the Arla Group is Arla Foods Ingredients (AFI), which is responsible for the production and sale of whey protein and lactose- and milk-based ingredients to the food industry. The target for AFI in Strategy 2017 is to double its revenue globally from approximately 2.5 to over 5 billion DKK.
Arla will also target efficiency improvements and innovative work practices in a bid to save 2.5 billion DKK by the end of 2015.
