The financial fallout of calls for a boycott of Arla products over its use of methane-inhibiting feed additive Bovaer has been described as “marginal”, by the dairy co-op’s UK boss.
Arla became the subject of fierce criticism on social media sites such as X last November after an announcement it was trialling the use of the additive – in collaboration with Morrisons, Tesco and Aldi – on around 30 of its UK farms.
But in the wake of the publication of “strong” financial results for the dairy co-op this week, Arla’s UK MD Bas Padberg played down any repercussions from the controversy.
Any impact on sales “would be very difficult to see, but if there had been any impact it would be marginal”, he told The Grocer.
Arla saw group revenues climb by 0.7% to €13.8bn last year, while net profit share of revenue rose from 2.8% to 2.9%, according to its 2024 annual results.
A key driver of that growth was via strategic brands Arla, Lurpak, Puck, Starbucks and Castello, which together achieved a volume-driven revenue growth of 3.7%, compared with a decrease of 0.7% in 2023 at group level.
Its UK business saw branded revenue up £89m (or 7.6%), largely driven by big gains for the Arla masterbrand (up 10%) and Lurpak (up 7.5%). Arla Protein saw revenues up 28.6%, with Arla Skyr increasing by 21.5% in “a particularly strong year for Arla’s yoghurt brands”.
The dairy giant’s UK foodservice division also saw strong volume growth at over 22%, with strategic branded revenue growth finishing the year at over 17%.
The annual results did, however, show total UK revenues fell by 2.9% year on year. Arla put this down to “changes in the external landscape such as lower prices and overall milk volume declines, plus adjustments to private-label volumes”.
And looking ahead to 2025, Padberg declined to rule out the need to impose cost price increase requests to retailers on key products such as own-label milk, due to tight supply and rising farmgate milk prices.
Arla is currently paying out a headline price for conventional milk of 48.27p per litre, while Defra’s most recent UK average farmgate price for December was 47.09p per litre – some 24.1% higher year on year.
As The Grocer reported earlier this month, a slew of branded Arla products have already increased in price since the turn of the year, with the supplier citing rising global demand and a “reduced supply of milk available”.
With the milk price at its current elevated levels, “we would expect to see production rise this year”, Padberg said. “And if I would follow normal economic logic, when cost prices increase, most businesses will look at their prices.”
Elsewhere, in the wake of Arla’s “strategic” decision to delist its plant-based Jörd drink from retail, Padberg admitted “we don’t see growth in that space, we see growth in full-fat milk”.
The supplier “had never let its eyes off dairy”, he stressed, but following its effective sidelining of Jörd, which will now be focused on the foodservice category, Arla instead saw opportunities in positioning dairy as the ideal non-ultra-processed food, Padberg suggested.
“There is increased consumer awareness and growing demand for less processed food,” he said. “Milk is a pretty good deal for consumers. It’s more natural [than plant-based alternatives] and delivers more on nutritional values at a better price.”
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