Arla Foods Announces Strategic Shift and Partnership with Sodiaal
Source: DairyNews.today
Arla Foods Ingredients (AFI) has unveiled an ambitious new growth strategy aimed at expanding its ingredients business, which is on track to surpass the production capacity at its two key Danish sites, Danmark Protein and ARINCO. As part of this strategy, Arla plans to reconfigure the ARINCO site in Videbæk, Denmark, transforming it into a dedicated facility for ingredients production.
Currently, the ARINCO site produces both ingredients and milk powder for Arla's B2B Early Life Nutrition (ELN) and branded ELN businesses. However, Arla has announced that it will phase out its B2B ELN segment over the next 19 months, while continuing to grow its branded ELN offerings. This transition is a crucial part of Arla's strategy to capitalize on the expanding global market for ingredients, which the company views as a key driver of future growth.
Luis Cubel, Group Vice President and Managing Director of Arla Foods Ingredients, expressed optimism about the company's new direction. "We see a very bright future for ingredients and a world of opportunities," Cubel said. "This new strategic direction will accelerate our ambitious growth plans for our ingredients production and enable Arla Foods Ingredients to further strengthen our position as a leading global player in the ingredients market."
In addition to its internal restructuring, Arla has formed a strategic partnership with French cooperative Sodiaal, a major player in the Early Life Nutrition sector. The partnership will focus on enhancing both companies' ELN businesses in China and other markets. Under this agreement, Sodiaal will take over the production of all Arla’s future ELN products for these regions. This collaboration is expected to leverage Sodiaal's robust production capabilities, further fueling the growth of Arla's branded ELN business.
Both Arla and Sodiaal are farmer-owned cooperatives with integrated supply chains and similar production technologies, making them well-suited partners for this initiative. The strategic shift at ARINCO is designed to free up capacity for Arla's expanding ingredients production, while allowing the company to meet growing global demand.
The transition, however, will have significant implications for the workforce at ARINCO and Arla Foods Ingredients’ headquarters in Aarhus, Denmark. Approximately 170 positions will be impacted by the changes. Cubel acknowledged the challenges this presents, stating, "It goes without saying that this is a difficult situation and a tough day for our employees. The changes will not be fully implemented for another 19 months, and until then, we will do everything we can to retrain and find internal job opportunities for those affected. The employees are highly skilled, and it is our clear ambition to retain as many of them as possible in Arla. However, redundancies will be unavoidable."
Arla has committed to working closely with its customers during the 19-month transition period to ensure their needs are met before discontinuing ELN production at the ARINCO site by the end of the first quarter of 2026. This move is part of Arla’s broader strategy to solidify its position in the global ingredients market, positioning the company for sustained growth in the years ahead.
Luis Cubel, Group Vice President and Managing Director of Arla Foods Ingredients, expressed optimism about the company's new direction. "We see a very bright future for ingredients and a world of opportunities," Cubel said. "This new strategic direction will accelerate our ambitious growth plans for our ingredients production and enable Arla Foods Ingredients to further strengthen our position as a leading global player in the ingredients market."
In addition to its internal restructuring, Arla has formed a strategic partnership with French cooperative Sodiaal, a major player in the Early Life Nutrition sector. The partnership will focus on enhancing both companies' ELN businesses in China and other markets. Under this agreement, Sodiaal will take over the production of all Arla’s future ELN products for these regions. This collaboration is expected to leverage Sodiaal's robust production capabilities, further fueling the growth of Arla's branded ELN business.
Both Arla and Sodiaal are farmer-owned cooperatives with integrated supply chains and similar production technologies, making them well-suited partners for this initiative. The strategic shift at ARINCO is designed to free up capacity for Arla's expanding ingredients production, while allowing the company to meet growing global demand.
The transition, however, will have significant implications for the workforce at ARINCO and Arla Foods Ingredients’ headquarters in Aarhus, Denmark. Approximately 170 positions will be impacted by the changes. Cubel acknowledged the challenges this presents, stating, "It goes without saying that this is a difficult situation and a tough day for our employees. The changes will not be fully implemented for another 19 months, and until then, we will do everything we can to retrain and find internal job opportunities for those affected. The employees are highly skilled, and it is our clear ambition to retain as many of them as possible in Arla. However, redundancies will be unavoidable."
Arla has committed to working closely with its customers during the 19-month transition period to ensure their needs are met before discontinuing ELN production at the ARINCO site by the end of the first quarter of 2026. This move is part of Arla’s broader strategy to solidify its position in the global ingredients market, positioning the company for sustained growth in the years ahead.
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