The group expects to see tougher competition in Denmark and Sweden in the coming years as a result of other large companies moving into the sector. These are the conclusions that have been drawn by Arla Foods' managing director, Jens Bigum, in his report to the meeting of the board of representatives in Stockholm.
"In view of the increasing internationalisation of the large multiples, this is an entirely natural development. As a result Arla Foods must aim at becoming more active abroad," said Bigum.
He believes that the group needs to strengthen its position as European leader in a sector that is experiencing massive development.
Bigum drew attention to Lidl's development in Sweden. The German discount chain now operates 22 outlets here which sell milk, cream, and yoghurt that is imported from Germany. The group plans to open 44 shops in Denmark.
According to Bigum, this will "put pressure on the market. In view of Lidl's ambitions, we're probably only witnessing the beginning."
"We should also expect to see more own-label products in Denmark and Sweden. This is one way for central European dairies to enter our core markets," he added.
Arla Foods fears that in Europe many companies are opting to produce products themselves and sell them under their own brand name. For instance, recently The first Swedish Dairy Company has decided that it will supply crème fraiche as own label in Sweden. Commentators believe this will follow in central Europe.
"This is an important event that will, without doubt, affect all Swedish dairy companies. We should realise that in the Swedish market, Arla is facing a new battle for market shares, a battle that will be protracted, difficult and not least expensive," according to Bigum.