Arla invests in Chinese milk market

Arla has invested £184m in a new Chinese joint venture that aims to increase exports to the world’s fastest growing dairy market.

The international milk co-op has signed agreements with China Mengniu Dairy Company and COFCO Corporation, China’s leading food and drink company and established the China-Denmark Milk Technology and Cooperation Centre which will provide expertise on milk quality, traceability and controlled milk production on farms.

The aim of the venture is to introduce new Arla products on to the Chinese market and increase turnover in China five-fold by 2016. Last year Arla’s turnover in China was around £75.95m.

Arla products will be sold through Mengniu’s sales channels and labelled as Mengniu products.

The Chinese dairy market has a growth rate of 10% and is expected to surpass the US as the world’s biggest dairy consumer in 2020.

“With the growth rates that are driving the country forwards, now and in the years to come, it is crucial for Arla to gain a solid foothold in the Chinese market,” said Arla Foods CEO Peder Tuborgh.

“These agreements will increase our export to China significantly over the coming years. It will contribute positively to our cooperative owners’ milk price from day one, as we are able to add more value to milk that we, otherwise, would have to sell on the global bulk trading market where the profit is lower historically.”