Peder Tuborgh

CEO at Arla

Peder Tuborgh has worked in the dairy industry since 1987 – always in Arla Foods, even though the company has had different names throughout the years. Peder is originally from Funen, and he grew up in the countryside, however, not in a farming family. He has also lived in both the US and Italy. Peder is the father of five children – the last one a surprising latecomer.

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Crossing borders

With radical demographic changes taking place on a global scale, the food industry isn’t a bad place to be. The world’s population will grow from 6 to 9 billion by 2030, while the middle class will grow from 2.5 to 5 billion people. As the buying pattern and consumption increases, so will the demand for dairy products. Actually, this development has been going on for several years, and Arla has spent a lot of time and resources on predicting future trends within the industry. In order to best prepare for the future, Peder Tuborgh and the rest of the management team have steered Arla through a major transformation process, with a fixed gaze on the development of the industry and a clear ambition to be in the frontline. According to Peder Tuborgh, the demographics of the dairy industry have changed completely, going from a situation where domestic dairy companies dominated the business to today’s transnational conglomerates defining the market. “I think that we were one of the first dairy companies that actually started to merge across borders. In 2000, we merged our operations in Denmark and Sweden. Since then, we have carried out mergers in several countries in Europe. Today, we have a great number of owners which isn’t uncomplicated, but nevertheless an important part of securing our future position”.

“It’s very Nordic I think — the sustainability platform that we are trying to build around our entire value chain, from cow to consumer”.

Nordic by nature

Even though Arla has claimed a global position, they see themselves as a Nordic company. “It’s very Nordic I think – the sustainability platform that we are trying to build around our entire value chain, from cow to consumer. Also the fact that we don’t tamper our products through genetic modifications. It’s one of the main levers in our Arla branding throughout several countries. If you sit on a couch in Shanghai or Beijing and watch an Arla Foods commercial, you will sense our Nordic profile. We don’t expose ourselves as a Danish brand, but it’s the Nordic values, a tradition for dairy developed over generations, that are embedded in our narrative and present in everything we do”. The transition from being a Nordic company to a global player has of course affected Arla in many ways, but some things remain the same. “We have worked very much with our vision and our values, and they have changed slightly over time, but if you look carefully, the essence is still the same. Our vision today is about creating the future of dairy, bringing natural and healthy products to the world. That has been the backbone for Arla since the very beginning”.

Arla is a dairy cooperative, owned by 12,500 farmers. All the benefits from the sale of Arla’s products go back to those owners. The owners live in seven countries in Northern Europe and they share the earnings equally on each litre of milk they deliver to Arla.

Arla has three global brands: Arla, Lurpak and Castello. Within these brands, Arla has identified eight categories as the ones in which they see growth opportunities on a global or regional scale.

Peder Tuborgh has been the CEO of Arla for 11 years, in which time the company has doubled both in terms of size and in terms of revenue.

Mindfully global

After four or five decades of zero growth, Arla is now on the right track, with a 10% growth in Denmark. “Those who will succeed going forward will be those who can actually create value through innovation and branding of the raw milk that we receive from our farmers”, Peder Tuborgh explains. And it is of outmost relevance to do so since, at the moment, milk is floating into Arla as well as the market at a very high pace.

“We have carefully chosen to focus on eight different categories and three main brands. The categories and brands have a commonality and a global understanding. But we are not mindlessly global. The adaption into different countries, and the execution of a common concept and technology platform among consumers that have clear differences in their consumption patterns and cultural understanding, is a very delicate process. We will definitely make mistakes, but we also clearly understand that we need to make that adaptation. In China, they don’t eat cheese with sticks in the same way that we eat cheese with forks. They eat different types of cheese, different products, in different ways. We need to adapt our innovation to the relevant regions, which is one of the reasons why we can’t spread ourselves thin throughout the world, and also the reason why we have made a very tough prioritisation among countries”, he elaborates.

“We need to choose where and how to play our game, and then be the best in the field. The trick is to combine that global idea and our global technology platform with being regionally and locally relevant to the consumers. There isn’t a precise formula for that and it undoubtedly involves trial-and-error.”

There is no lack of vision in Arla. Or courage for that matter. The daredevil of dairy rests calmly in its aspiration to supply the world with natural and healthy products – while holding on its Nordic values. And the future looks bright. With the increasing demand for dairy products, Peder Tuborgh and his colleagues have their work cut out for them. Whether Danish cheese will make its way to the Chinese dinner table, or the other way around, time will tell. We are looking forward to see how the story unfolds from here.