Arla invests €63 million in skyr and cottage cheese as demand for protein-rich foods grows

Arla is investing more than EUR 63 million to expand skyr and cottage cheese production, as demand for high-protein dairy continues to grow. The investments in Germany and Sweden will help Arla meet growing demand across markets while creating greater value from farmer-owned milk.

Across Europe and beyond, consumers are increasingly looking for tasty and practical foods that might be a part of active lifestyle and balanced diet. Products such as skyr and cottage cheese have become everyday staples for many people, reflecting a broader shift towards protein rich foods.

The trend is reflected in strong growth across both categories. Over the past three years, skyr volumes have grown by more than 33% across Arla's European markets, while cottage cheese volumes have increased by 25% across Arla's markets over the same period.

Demand for both categories has grown so rapidly in recent years that producers across the dairy industry are investing to expand capacity and keep pace with consumer needs. As part of this development, Arla is investing more than EUR 63 million in skyr and cottage cheese production. This includes a EUR 35 million investment in skyr production in Upahl, Germany and a EUR 28.3 million investment in cottage cheese production in Falkenberg, Sweden.

"Consumer preferences continue to evolve, and we see growing demand for products with high-protein combined with convenience and great taste. 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,” says Peder Tuborgh, CEO of Arla Foods.

Expanding capacity in one of dairy's fastest-growing categories

One of the strongest examples of this development is skyr. Originally rooted in Nordic dairy traditions, skyr has become one of the fastest-growing dairy categories across Europe, appealing to consumers seeking protein-rich foods.

To support this growth, Arla is investing EUR 35 million in additional production capacity at its site in Upahl, Germany, as part of its broader European skyr network. The investment will help Arla meet growing demand and continue developing the category across markets.

The investment builds on a multi-year effort to expand Arla's ability to serve growing consumer demand for skyr, which has consistently grown faster than available production capacity across several markets. Since 2023 Arla has invested EUR 51 million to increase skyr capacity and efficiency at our dairies in Denmark, Germany and Sweden. The EUR 35 million investment in Upahl comes on top of the previous investments.

Cottage cheese continues its remarkable growth journey

Arla is also investing EUR 28.3 million in its Falkenberg dairy in Sweden, Europe's largest production site for cottage cheese. The investment supports a category that has been transformed in recent years by changing consumer preferences around protein-rich foods.

Once considered a niche product, cottage cheese has become one of the clearest beneficiaries of the global nutrition trend. Consumers are increasingly incorporating cottage cheese into everyday meals and snacks, attracted by its versatility, taste and nutritional profile.

In the last year, market growth has ranged from 13 % in Sweden to 37% in Denmark and the UK, and 38% in the Netherlands. Arla is the largest branded supplier of cottage cheese overall in Arla’s European markets, driven particularly by its strong presence in Sweden and Denmark. The investment in Falkenberg will help Arla meet the growing demand both in Sweden and other European markets.

The Falkenberg investment is the latest step in Arla's broader expansion of its cottage cheese business. Since 2025, Arla has invested EUR 34 million in cottage cheese production in Sweden, while also expanding internationally through the acquisition of Australian cottage cheese producer Brancourts earlier this year.

Investing behind the future of dairy

Together, the two investments demonstrate Arla's belief that dairy will continue to play an important role in consumers' lives.

“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," says Peder Tuborgh.

Facts: Skyr investment

• Investment: EUR 35 million
• Location: Upahl, Germany
• Purpose: Increased Skyr production capacity and network efficiency
• Expected start of commercial production: Second half of 2028

Facts: Cottage cheese investment

• Investment: EUR 28.3 million
• Location: Falkenberg, Sweden
• Purpose: Increased cottage cheese capacity and site modernisation
• Completion: Gradually through 2028