The company plans to spend £6.7m on a joint venture with blow-moulding company Logoplaste to make more milk bottles.
Arla said it hoped the new facility, which should be operational by March, would boost production of Cravendale by 50 million litres a year.
"Cravendale has doubled in value in the last four years," said brand manager Sam Dolan. "We expect value sales to exceed £166m by the end of the year."
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