The cooperative saw retail and e-commerce sales of its branded products continue to grow as people maintained a higher level of in-home consumption in the first part of the year.
However, in the second half of the year, the inflationary environment created by Covid-19 is expected to challenge the cooperative and its farmer owners with increasing production costs due to higher prices on fuel, energy, packaging and feed.
In the first half of 2021, Arla UK achieved an overall Strategic Branded Revenue Growth of 4.6% compared to the first half of 2020, driven by brands like Arla Cravendale, which grew 10%, Arla Protein milk at 34%, and Arla B.O.B. at 21%. Across the full Arla brand range the total average growth was 13%.
Compared to the first half of 2020, Arla UK’s foodservice business grew 21% in the first half of 2021 as restaurants, canteens and pubs cautiously began to re-open in the spring.
Arla said its stable of licensed brands also performed well, led by its ready-to-drink Starbucks portfolio which grew 42% in volume in the UK.
In the first half of the year, Arla UK also completed the relocation of its Arla Lactofree milk production from Denmark and Sweden to its site in Settle, Yorkshire, creating 50 new jobs as part of a new £25m ($34.3m) investment.
Total Arla Group revenue increased slightly by 1.2% to €5.441bn ($6.4bn) in the first half of the year. The company is adjusting its expectations for full year revenue for 2021 to the range of €10.6bn to €11bn ($12.47bn to $12.94bn).
Peder Tuborgh, CEO of Arla Group, said, “The outlook remains volatile and whilst our recipe for managing Covid-19 has been successful, we must now manage the transition to the next normal just as well. We expect to see a re-balancing of demand between retail and foodservice which will bring our retail sales to a more familiar level and soften our branded growth and the broad inflationary environment will continue to challenge our company and farmer owners.”