Arla must be more active in Europe

As Arla Foods will face stronger competition from foreign dairy groups in Scandinavia – partly due to the continuing rise of own label products – the Group must upgrade its activities in European and global markets accordingly.

In his report to the meeting of the Board of Representatives in Stockholm, Jens Bigum said that the Group expects to see tougher competition in Denmark and Sweden over the coming years as other large dairy companies move into the Scandinavian market.
"In view of the increasing internationalisation of the large multiples, this is an entirely natural development. As a result Arla Foods must aim at becoming more active abroad,” said Jens Bigum, who emphasised the need for growth in order to strengthen the Arla Group’s position as European leader in a sector experiencing massive development
Pressure in Sweden
Pointing to Sweden as an example of the growing competition, Jens Bigum drew attention to the German discount chain Lidl’s arrival in Sweden where the chain now operates 22 outlets selling milk, cream, junket and yoghurt from Germany and Holland. According to press reports, Lidl intends to open 44 shops in Denmark.
"This will put further pressure on the market,” said Bigum. “In view of Lidl’s ambitions, we’re probably only witnessing the beginning. “We should also expect to see more own label products in Denmark and Sweden.
"This is one way for central European dairies, and, for example, the Finnish Valio, to enter our core markets,” he added.
Affecting market value
The first Swedish dairy company has agreed to supply creme fraiche as own label.
“This is an important event that will, without doubt, affect all Swedish dairy companies,” said Jens Bigum. "We should realise that in the Swedish market, Arla is facing a new battle for market shares, a battle that will be protracted, difficult and, not least, expensive.”