COMPANY PROFILE -Arla Foods
Business Sector :Food Processing, Dairy
Operating Geography :Denmark, United Kingdom, Europe, Global
About Arla Foods :Arla Foods is a Scandinavian cooperative with its headquarters based in Viby, Denmark. Arla Foods was formed after the merging of two companies- Sweden’s Arla and Denmark’s MD Foods in the eve of the new century. Arla Foods’ connections with the UK began at the end of the century when Lurpak butter was introduced to the UK market. The significant breakthrough in Arla Foods plc and Express dairies plc came when the two companies merged and formed Arla Foods UK plc. According to their business strategy, Good Growth 2020 is a corporate scheme aiming to add value in people’s lives by establishing their position as a leading- global dairy company. Arla Foods is the fifth-largest dairy company in the world and owned by more than 12,500 dairy farmers. Arla amalgamates traditional expertise and prominent technologies to ensure its products remain closer to nature- from ‘farm to fridge’. The company spearheads 95% and 65% of the diary production markets in Denmark and Sweden yet these countries constitute only half of Arla Food’s annual sales as of 2020.
Arla Foods’ USP or unique selling proposition lies in being one of the world’s leading suppliers of powdered milk products, adding 15% of sales, and a premium producer of butter, specifically under its 100-year-old Lurpak brand. Fresh milk products are the company’s largest product component, generating sales up to more than 40%. Arla’s mission statement reads, “To secure the highest value for our farmer’s milk while creating opportunities for their growth.” Arla’s vision is “To create the future of dairy to bring health and inspiration to the world, naturally.”
Arla Foods Revenue :
€ 10.5 billion – FY ending 31st Dec 2019 (y-o-y growth ~0%)
€ 10.4 billion - FY ending 31st Dec 2018
Competitive Analysis of Arla Foods
|1. Fastest growing FMCG brand in European markets |
2. B2B sales to other companies
3. Delivering a sustainable business performance
|1. Closure of Gefleortens dairy factory|
|1. Digitalizing through e-commerce platforms|
2. Growing dairy demand in developing markets
3. Increasing flexitarian options
4. Diversifying into plant-based alternatives
5. Expansion in high potential MENA markets
|1. Global climatic change deterioration would affect the milk production capacity
2. Negative consequences of Brexit in UK market
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Detailed SWOT Analysis of Arla Foods
1. Fastest growing FMCG brand in European markets: The Arla Brand is one of the fastest growing FMCG brands in European market. In 2019, Arla’s branding and communication teams in European market helped in strengthening the brand by delivering key initiatives to drive equity. It helped in scaling more assets across markets. They created a distinctive visual Arla brand identity. The brand identity has helped in recognition and saliency. The efforts on communication have helped Arla to highly perform on brand memorability and persuasion for all Arla brand advertisements. All Arla brand campaigns now convey their brand essence by providing an emotional platform with which they connect with consumers. Such initiatives have helped Arla strengthen as a first-choice brand.
2. B2B sales to other companies: Arla along with its sales channels, also conducts business to business sales to other companies. These companies use Arla’s products for their production. Arla also is involved in industry sales of cheese, milk powder and butter. These activities are called as trading. Dairy market is becoming more volatile and it is extremely difficult to predict milk volumes required. In this case, trading helps a lot since it allows to manage this seasonal and geographical variability in milk intake. It ensures Arla is able to process and sell all the milk delivered by the members. The increase in trading capacities in higher value commodities such as mozzarella and fat-filled milk powder has helped Arla in strengthening its business. It presents Arla with more options to manage the milk-pool. Even though trading is not a core business segment for Arla, it is important for its success. The revenue from trading accounts for almost 15.2% of total revenue of Arla in 2019.
3. Practicing sustainable dairy farming: Our farmer owners produce around 13 billion kilo of milk each year. Arla milk is already some of the most climate efficient in the world, with a CO₂e emissions intensity approximately half of the global average. As we understand more about climate change and how to fight it, we must evolve even further, and with even greater urgency. Our on-farm Climate Action Plan is being implemented to improve on the effective programmes we already have in place.>The remaining section of “strength" is available only in the 'Complete Report' on purchase.
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Major Competitors :
- Lactalis International
- Fonterra Co-operative Group
- Gps Dairy Consulting
Major Brands :
- Arla and More
- Arla Buko
- Arla Dano
- Arla Cheasy
- Arla Natura
- Arla Protein
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DELIVERY AND FORMAT
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References used in Arla Foods Analysis Report
1. Consolidated Annual Report 2019 :
2. Arla to close the Gefleortens Dairy : https://www.dairyreporter.com/Article/2019/11/28/Arla-to-close-Gefleortens-dairy
3. Global dairy consumption growth to continue: https://dairy.ahdb.org.uk/news/news-articles/august-2019/global-dairy-consumption-growth-to-continue/#.XpyHP0AzbIV
4. Empowering chefs to put more flexitarian options on the table: https://www.arla.com/company/news-and-press/2020/pressrelease/empowering-chefs-to-put-more-flexitarian-options-on-the-table/
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Arla Foods SWOT & PESTLE Analysis - SWOT & PESTLE.COM
SWOT & PESTLE.com (2020). Arla Foods SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/arla-foods/ [Accessed 28 May, 2020].
In-text: (SWOT & PESTLE.com, 2020)
Copyrights and Disclaimer
Arla Foods SWOT and PESTLE analysis has been conducted by Sushree Lasyamayee and reviewed by senior analysts from Barakaat Consulting.