Increased added value, further investments and acquisitions are the key components of Arla Foods’ stand-alone strategy.

Following the abandonment of the merger with Campina, Arla Foods will pursue the ”Strategy 2007” plan which will be presented to the Board of Representatives for approval in June.
Under the so-called ”stand-alone” strategy, Arla Foods will focus on the Nordic countries, the UK, exports and ingredients as well as on cutting costs and increasing efficiency. As some of the elements in the strategy plan are a continuation of previous strategies, several of the individual projects have already been set in motion.

The Nordic area - one market
By focusing on one Nordic market Arla Foods intends to exploit the potential of one large marketplace rather than four separate and smaller ones. One inherent advantage is that the one market strategy for the Nordic area allows for common ranges and joint marketing initiatives. An example of this is Karolines Køkken (Caroline’s Kitchen) known as Arla köket in Sweden where Karolines Køkken and Arla köket will bring cooking products, recipes and inspiration together. Further examples are Yoggi, Cultura, Apetina feta and Høng which are sold in more than one Nordic country under the same name. Yet another advantage is the potential for maximising the benefits from new and exciting products in that some of these can be sold to the entire Nordic area. Product development will, therefore, be a key word.

Stronger links to UK multiples
Arla Foods UK plc’s future strategy includes creating new and closer ties to the large multiples as well as making home market production more efficient. A structure plan in which the new Stourton dairy is a major component is being implemented and the post merger rationalisation programme have been completed. A further aim is to increase exports of Danish and Swedish products for the UK market by exploiting Arla Foods’ strong position as a fresh milk supplier to the major multiples.

Speciality cheese for Europe
Arla Foods will pursue the general objectives of the first strategy plan decided in the aftermath of the MD/Arla merger although there will be additional emphasis on those countries and product categories that have been earmarked as focus areas, i.e. Germany, Spain, Holland and Greece, with cream cheese, feta, yellow speciality cheese, Danish blue and mozzarella as the main product categories. Having successfully been involved with own label products for more than 20 years, the Europe Division will now also set out to raise the profile of the Arla brand.

Investments in the Middle East
On the strength of the experience from Saudi Arabia, Arla Foods is determined to become the regional market leader for cheese, cream and butter in the Middle East. This will be achieved by penetrating new countries and markets and developing new products as well as strengthening marketing. The Arla Foods’ Board recently approved an investment plan totalling DKK 240 million for the region.

Milk powder sales to be increased
Within the milk powder segment, Arla Foods Ingredients is determined to become the market leader in selected geographical areas. The aim is to switch volumes from bulk products to retail sales of packs/cans directly to the consumer. The construction of the new factory at Vimmerby in Sweden is in keeping with this strategy as are potential projects in China.
Within milk proteins, the aim is for Ingredients to become the worldwide market leader, e.g. through global production as exemplified by the factory in Argentina.

Strategy 2007 is expected to offset the fall in the milk price by 15-19 Danish øre and thereby secure earnings of DKK 2.15-2.19 per kg milk in 2007/08. Without the implemenation of the strategy plan, the milk price would be DKK 2.00 per kg.