Arla is investing €63.3 million to increase capacity for skyr and cottage cheese at two major production sites in Germany and Sweden.
The Scandinavian dairy cooperative will commit €35 million to its Upahl facility in Germany, where the funding will support expanded skyr production. A further €28.3 million will be allocated to the Falkenberg site in Sweden to increase cottage cheese output.
The investment reflects stronger demand for high-protein dairy products. Across Arla’s European markets, skyr volumes have risen by more than 33%, while cottage cheese volumes have grown by 25% over the same period.
Cottage cheese has recorded particularly strong growth across Europe during the past year, as consumers place greater emphasis on health and wellness. Sales increased by 13% in Sweden, while Denmark and the UK each recorded growth of 37%. The Netherlands saw sales rise by 38%.
The move highlights wider food and drink consumer trends, including growing interest in protein-rich, convenient products. It also reflects broader food and beverage industry trends and food manufacturing trends, as dairy producers respond to changing purchasing habits through targeted investment in food processing technology and production capacity.
Arla recently strengthened its global cottage cheese operations by acquiring Australian producer Brancourts.
At Upahl, the investment will also improve operational efficiency, with completion expected during the second half of 2028. Work at Falkenberg will involve modernising the site, with upgrades scheduled to be introduced progressively throughout 2028.
“Consumer preferences continue to evolve, and we see growing demand for products with high protein combined with convenience and great taste,” said Arla chief executive officer Peder Tuborgh.
“Dairy products such as skyr and cottage cheese continue to resonate with consumers across many markets, and these investments reflect our ambition to make these products available to more people.”
He added: “These investments ensure that we can continue meeting growing consumer demand, supporting our customers and creating long-term value from our farmer owners’ milk.
“The growth we are seeing in skyr and cottage cheese gives us confidence in the long-term potential of these categories.”
The programme forms part of the company’s broader response to food and drink industry innovation, alongside developments in food distribution trends, food and drink sustainability, food and drink regulations, food and drink packaging and food and drink marketing.