Arla investing in added-value dairy products

Published 14 February 18

Last week Arla announced that they will be acquiring Yeo Valley Dairies limited, which will give them the rights to sell organic milk, butter, spreads and cheese under the Yeo Valley branding. The Yeo Valley yogurt, ice cream and desserts business will continue to run independently.

The move signifies Arla’s belief that there is significant potential to grow organic sales in the UK, by encouraging more consumers to trade up to organic products. Of interest could be the inclusion of cheese in the deal – Yeo Valley do not currently produce any cheese, but as Arla is the UK’s largest cheese manufacturer this could be an easy area for them to expand into. However no specific plans have been announced.

This announcement comes less than a fortnight after Arla announced that they would make their Aylesbury plant the UK home to the production of their Lactose free dairy products. This development will be part of their £72 million UK investment plan, with £33.6 million going into the Aylesbury site.

While organic products present an opportunity for existing consumers to trade up, lactose-free products have the potential to bring in customers who would otherwise not consume dairy. According to Kantar Worldpanel, 52.6m litres of lactose free fresh milk (of all brands) were sold in the 52 weeks to 31 Dec 2017, up 8% on the year before. Currently this milk is largely imported, but Arla’s planned developments would allow the lacto-free brand to be made from British milk.