RIYADH, 28 August 2005 — Danish dairy conglomerate Arla Foods, maker of the famous Lurpak butter, has announced plans to move its multimillion dollar production plant to Saudi Arabia. The move is part of Arla Foods’ business policy to expand and maintain its position as market leader in the Kingdom and other Middle East countries especially in terms of sales and production of fresh cheese, butter and cream.
“This relocation project is in planning phase and we are awaiting approval from the Saudi regulatory agencies,” said Max Sorensen, general manager of Danya Foods, the local partner of Arla. This new plant, once completed, will help to increase sales of Arla’s products from the current 60,000 tons per year to 120,000 tons by 2010. Arla’s Lurpak is the Middle East’s leading butter brand, also accounting for a major market share in Saudi Arabia.
Sorensen said that he was hopeful of major progress in terms of the relation of the plant within next six months. He said: “Within the next six months, the company will be able to spell out the business plans in detail besides the company’s plans to train local manpower.”
A cost-benefit analysis of the consequences of relocating the production facility to Saudi dairy, Danya, has already shown substantial advantages.
“The relocation will boost sales of Danya/Arla products and the company can set high sales targets, which will be achieved by penetrating new countries and their markets,” said a report published by “The Copenhagen Post” recently.
The report said that the Denmark-based Arla Foods’ Board has already approved a multimillion dollar investment plan for Saudi Arabia and the Middle East region as a whole.
The new production facility in Riyadh will help consumers in the Middle East to buy fresh locally produced products. Arla’s sales in the region currently total about SR1.5 billion annually. Arla is a cooperative owned by about 15,000 Danish and Swedish dairy farmers. Arla is the largest dairy group in Europe by milk volume processed. In the UK, Sweden and Denmark alone, the company sources approximately 8.6 billion liters of milk per year.
Arla Foods employs about 22,000 people worldwide. It trades in 120 different countries and has operations in Denmark, Sweden, the UK, Brazil, Argentina and Poland. Arla’s turnover derives from Denmark (20 percent), Sweden (21 percent) and the UK (32 percent).
Markets outside these countries account for approximately 27 percent of Arla Foods’ turnover, mainly from the sale of cheese, butter, milk powder and ingredients
