Arla Foods has adjusted its revenue forecasts due to changing consumer preferences and market conditions.
- Supermarkets report increased demand for own-label dairy products amidst ongoing cost-of-living challenges.
- Arla’s revenue projection has been revised down significantly, under the impact of declining milk prices.
- The company’s profits have diminished drastically compared to the previous year due to external economic pressures.
- Efforts to remain competitive include price reductions and sustainable packaging initiatives.
Arla Foods has recently amended its annual revenue predictions, attributing this revision to a notable shift in consumer buying habits and evolving market scenarios. Supermarkets have observed a growing preference among consumers for own-brand dairy products, driven significantly by the ongoing financial pressures faced by households.
Consequently, Arla has lowered its revenue forecast to a range between €13.2 billion and €13.7 billion, down from an earlier estimate which reached up to €14.2 billion. The decrease is primarily due to reduced milk prices, which reflect increased production volumes and a drop in consumer sales. Elevated costs related to ingredients, packaging, and energy have further burdened the company.
Within the UK, Arla’s largest market comprising approximately 2,000 farmers, the net turnover saw an increase of 16.9% reaching £1.37 billion. This growth in turnover comes despite a decline in sales of branded products, as the company focused on supporting consumers by lowering prices and reducing pack sizes, notably across its Lurpak range.
Earlier warnings from Arla had highlighted potential challenges, including impending price hikes and threats to milk production should the UK government not swiftly address existing labour shortages. The complications in staffing are largely attributed to Brexit, which ended the free movement of workers between Britain and the EU, complicating recruitment for many of Arla’s farmer-owners.
Despite these hurdles, Arla remains optimistic about future branded growth. Peder Tuborgh, Arla’s Chief Executive, has acknowledged the persistent impact of inflation on consumer behaviour but anticipates gradual growth in underlying categories. Arla’s continued investment in sustainable practices, such as replacing coloured milk bottle caps with clear ones, underscores its commitment to environmental responsibility.
Arla Foods is navigating a challenging economic environment with strategic adjustments and sustainable practices.
