Arla invest in value

ADDING VALUE to liquid milk on a large scale calls for significant investment and the benefits will take time to trickle back to farmers.

Sales of Cravendale, Arla Foods UK‘s extended shelf-life brand that was launched about six years ago, are growing annually by 33% and hit 110m litres last year.

But the company is having to invest a further £20m in its Leeds’ dairy where the milk is produced to keep up with demand, says executive director Tim Smith.

With the backing of a multi-million pound advertising campaign, Mr Smith expects to sell over 200m litres in the next financial year.

“This is a way of ultimately providing added value for the farmers supplying us. They have the protection of a brand and a price premium that will ultimately find its way back into the mix.”

But although two-litre-packs of Cravendale sell for 9-10p more than conventional milk, much of this is required for investing in the brand, says Mr Smith.

“We would like a branded product to return more but in the early years that is tough.”

The One is Robert Wiseman Dairies’ more recent move into the branded fresh milk market and already the results are encouraging, says sales and marketing director Sandy Wilkie.

Launched last May, The One taps into the demand for healthier food and drinks, but unlike Cravendale, it requires no special processing technology.

But marketing still costs millions, Mr Wilkie says. “There is a little bit of a price premium but the extra revenue goes into marketing.”

He hopes the imminent launch of a 250ml-pack for people to drink on the go well help to add even more value.