Danish dairy leader Arla Foods has unveiled an initiative to boost its production of early life nutrition (ELN) ingredients significantly. However, this strategic reorganization will see the closure of a B2B operation, which is expected to cause job redundancies within the company.
According to the cooperative, its Arla Foods Ingredients (AFI) subsidiary anticipates outgrowing the capacity at two domestic facilities: Danmark Protein and Arinco. Arla plans to transition the Arinco site, situated in Videbæk, into a specialized production facility for ELN ingredients. At present, Arinco also manufactures milk powder for AFI’s B2B ELN sales and for Arla’s branded Early Life Nutrition sector.
The cooperative has indicated that the ELN B2B segment at AFI will cease operations in approximately 19 months. Nonetheless, Arla intends to pursue expansion opportunities for its branded ELN products. This reorganization is projected to affect around 170 positions at both the Arinco facility and AFI’s headquarters located in Aarhus.
In addition, Arla has announced a partnership with the French cooperative and ELN producer, Sodiaal. This collaboration aims to accelerate the ELN business’s growth within China, with Sodiaal set to produce all of Arla’s ELN products in China and other global markets. Arla emphasized that its branded ELN operations will significantly benefit from Sodiaal’s robust production capabilities.
Both Arla and Sodiaal are farmer-owned entities boasting integrated supply chains, and the companies utilize remarkably similar production technologies.
Commenting on the overall strategy, Luis Cubel, group vice president and managing director of AFI, stated, “We see a very bright future for ingredients and a world of opportunities. This new strategic direction will accelerate our ambitious growth plans for our ingredients production and enable Arla Foods Ingredients to further strengthen our position as a leading global player in the ingredients market.”
Regarding the anticipated job losses, he noted, “It goes without saying that this is a difficult situation and a tough day for our employees. The changes will not be fully implemented for another 19 months and, until then, we will do everything we can to retrain and find internal job opportunities for those affected.”
Throughout the 19-month transition phase, Arla is committed to closely collaborating with its customers to fulfill their needs before the cessation of ELN production at Arinco, targeted for completion by the end of Q1 2026.
Recently, Arla also announced a round of capital investments in Denmark, aimed at bolstering the production of its Starbucks and Cocio milk drink lines. The company plans to allocate DKr20 million (approximately $2.9 million) towards projects at its Esbjerg facility to support growth for these brands across Europe, the Middle East, and Africa (EMEA).
With ownership resting in the hands of 8,000 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg, and the Netherlands, Arla remains committed to driving innovation within the food and beverage industry, adapting to current consumer trends.
In conclusion, as Arla navigates this significant transition within its Early Life Nutrition operations while simultaneously investing in growth opportunities, the company firmly positions itself as a thought leader amid the rapidly changing food and beverage sector.
