Finding new pastures

ARLA CASE

In the wake of the financial crisis, the dairy industry, like most other industries, saw an increasing number of consumers choosing products according to price rather than quality or brand. Budget products filled up supermarket shelves, offering a low-cost alternative to the starved consumer. Not surprisingly, the crisis also affected the global dairy company Arla Foods, which saw a clear change in consumer behaviour but insisted, nonetheless, to inspire change.

Creating passion

As one of the largest producers of dairy products in the Nordic countries, Arla Foods’ role is to ensure diversity and innovation within their product categories, while leading the way in an international environment with increasingly fierce competition.

“That’s why we’ve launched a new strategy with the purpose of reinstating passion for dairy among consumers and employees, driving the development of each category starting from the top and supplying innovative premium products. We need to rebuild a culture of pride and passion for every single dairy product we make,” Peter explains.

Arla Foods launched a threefold strategy with a simultaneous ambition to drive high-end innovation and quality, to develop new exciting dairy

consumption occasions in the mainstream segment and to continuously remain cost-competitive compared to international competition.
“Our obligations are many. We need to be able to offer a cost sensitive alternative through efficient mass production and at the same time develop interesting premium products for the more conscientious consumers. But more importantly, we need to ensure that we don’t end up with a market for dairy, as seen in many other countries, with a rather limited product offering within each category, primarily dominated by budget products. We need to ignite passion, beginning with the premium segments, which will eventually create a ripple effect throughout all products and price segments, ensuring choice, quality and value for all,” Peter underlines.

Number of dairy farmers owning Arla in 2015

“Many consumers have stopped making engaged decisions when they shop for groceries – they choose the cheapest alternative which eventually will devaluate the quality of dairy products. Similarly, the dairy industry has not assumed responsibility for driving and exploiting the opportunities of developing products that appeal to those looking for quality and taste. At Arla Foods, we cannot just stand by and watch this happen”

Peter Giørtz-Carlsen, CEO of Arla Foods Denmark

The renaissance of the nordic kitchen

Another interesting trend involving consumer behaviour and preferences for more premium products is the increasing interest in the Nordic kitchen, combining a greater focus on gourmet quality with the use of local everyday products. This is clearly an open invitation for dairy producers such as Arla Foods to be at the forefront of innovation, diversity and category development. Arla Foods will begin the transformation from within.

As part of the process, Arla Foods is working on streamlining their product portfolio as well as on developing new products and using new channels to expand the market, hereby creating new consumption occasions.

Arla has production facilities in 12 countries, sales offices in an additional 30 countries and more than 18,000 employees.

Arla products are sold in more than 100 countries, with core markets being Denmark, Sweden, the UK, Finland, Germany and the Netherlands.

“Before we can expect passion for dairy among consumers, we must ‘live’ the passion among ourselves. To make this happen, we’ve involved all employees in the strategy and implementation process. We all need to take ownership, and the management team must work on breaking down barriers that hinder passion in flourishing”

Peter Giørtz-Carlsen, CEO of Arla Foods Denmark