Arla increases US volumes

The start-up of local production has boosted imports of products from Scandinavia to the US. The combination of local production and imports provides Arla Foods with more growth opportunities in the US market than ever before.

“Our imported business has increased in an environment where imports from Europe have dropped 10% this year,” explains Andrew Simpson, President of Arla Foods Inc. “Domestic production has enabled us to sell more imported products because we’re seen as relevant.”

Following the acquisition earlier this year of White Clover Dairy in Wisconsin and the Danish Tholstrup Cheese, which owns a dairy in Michigan, sales are rising across the board. To date, imports of cheese and butter from Scandinavia are up by 5% while havarti alone accounts for an 8.5% increase.

Andrew Simpson, President of Arla Foods Inc.

“I believe that this is only the start. We have huge opportunities in front of us,” Andrew Simpson says.

2006 has been a spectacular year for Arla Foods US subsidiary. At the start of the year, Arla Foods employed a staff of 20 at the office in New Jersey and operated a licensed production at White Clover Dairy in Wisconsin. Imports from Scandinavia accounted for 80% of Arla’s volume in the States.

Since then, the acquisition of White Clover and Tholstrup Cheese has resulted in staff levels increasing to some 150 people with local production more than doubling - from 20% to 45% of Arla’s total volume in the US. The latter is particularly important since US-produced products dominate the markets.

“Imported on its own is not sustainable. If we want to be the category captain and be regarded as the specialist, we must offer both,” Andrew Simpson emphasises. “Otherwise we end up being in the smaller part of the market, which makes our influence less. Therefore, the success of our imported business is really dependent on our ability to offer domestic products.”

So far, havarti is Arla’s most successful product in the US where Arla has achieved the position of market leader through íts local production in Wisconsin combined with imports of the strong brand, Denmark’s Finest, from Nr Vium Dairy in Denmark.

In the imported blue cheese category, the Arla brand, Rosenborg, remains the largest by far. Including the American brands, Rosenborg is the second largest brand in the category. Moreover, the addition of the Tholstrup Saga brand, the fifth largest in the category, opens up new dimensions for Arla Foods in that the blue cheese category now has similar opportunities as havarti for exploiting the synergies from combining imported and locally produced products.

”We now have the opportunity to become the category manager," Andrew Simpson points out. “Our imported Rosenborg brand has very strong credibility in the market whilst Tholstrup’s Saga brand is seen as a domestic high quality blue-white product. So that’s a perfect match.”

FACTS

US accounts for 30% of world’s cheese consumption
Total US cheese market: 4 million tons
Specialty cheese is growing five times faster than overall cheese market
Current specialty cheese market is 350,000 tons
Specialty cheese segments are dominated by domestic suppliers: 71.7% domestic, 28.2% imported