Arla Foods invests over €63m in skyr and cottage cheese capacity

Arla will allocate €35m to its Upahl dairy in Germany, where it will add skyr-making capacity. A further €28.3m will fund higher cottage cheese output and modernisation at the company’s Falkenberg site in Sweden.

The Upahl project is part of Arla’s broader European skyr network. Commercial production from the new capacity is due to start in the second half of 2028. The company has invested €51m since 2023 in skyr capacity and efficiency at dairies in Denmark, Germany and Sweden.

Arla said skyr volumes across its European markets have risen by more than 33% in three years. It described skyr as one of the continent’s fastest-growing dairy categories, with demand for protein-rich products that fit everyday eating occasions.

At Falkenberg, which Arla describes as Europe’s largest cottage cheese production site, the investment will be delivered progressively through 2028. The company said the category’s growth reflects consumer interest in protein-rich foods and its use in meals and snacks. Market growth over the past year ranged from 13% in Sweden to 37% in Denmark and the United Kingdom, while the Netherlands recorded 38%.

Arla reported that cottage cheese volumes have increased by 25% over three years. It said it is the largest branded cottage cheese supplier across its European markets, with a particularly strong position in Sweden and Denmark. The Falkenberg project follows €34m invested in Swedish cottage cheese production since 2025.

Arla has also expanded its international cottage cheese business through the acquisition of Australian producer Brancourts earlier this year. Peder Tuborgh, Arla’s chief executive, said consumers were seeking products that combine “high-protein” content with convenience and taste. He said the investments would help the company meet demand, support customers and create value from its farmer owners’ milk.