Arla Foods to open new cheese plant with Dairy Farmers of America

Two dairy co-operatives in the USA are planning to open a new cheese plant in the western part of New York state. Two farmer owned co-operatives, Arla and...

Two dairy co-operatives in the USA are planning to open a new cheese plant in the western part of New York state. Two farmer owned co-operatives, Arla and Dairy Farmers of America (DFA) will focus on cheddar cheese production, which accounts for a third of the cheese consumed in the USA.

Peder Tuborgh, chief executive of Arla Foods, said: “Together with Dairy Farmers of America and eight of their farmers, who will supply the raw milk, we will explore the opportunities in building premium quality standards into the cheddar category through the Arla brand. Adding cheddar to our US portfolio will make us more attractive to the retailers and help increase the sales of our European products made from owner milk.”

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The new plant will be situated in western part of New York state [Image: Arla Foods]
The raw milk for the plant will come from eight farms situated locally to the plant. DFA members are expected to supply 70,000 tons of raw milk annually. Due to the USA’s quota system, Arla was only able to import a limited amount of cheddar. The Danish co-op will invest 20% of the required capital for the joint venture (USD $11.6m), which is worth USD $53m. Arla will also own 20% of the business, with DFA owning 70% and the remaining 10% belonging to the eight farmers who supply the milk.

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Arla and DFA logosArla and DFA expect to start production in the autumn of 2017, after the construction of the site.

Don Stohrer Jr, head of Arla Foods USA, said: “American families are increasingly looking for food products that they can feel good about serving and consuming from a better-for-you standpoint. This is exactly the position we have created for the Arla brand with its authenticity, transparency and great taste. It’s an attractive position that currently doesn’t exist in the USA dairy aisle or the cheddar segment. Our expectation is that the new cheddar products will create a halo effect for the cream cheese and other Arla branded products.”

Arla’s corporate strategy Good Growth 2020 identifies the US market as one of its six strategic growth regions. Last year Arla Foods USA had a revenue of €123m (USD $139.99), up 14% from 2014. With 14,000 members and 9,000 farms across America, DFA is one of the country’s most diverse manufacturers of dairy products, food components and ingredients. DFA’s net sales in 2015 reached $13.8bn, a decrease from $17.9bn in the previous year – a fall driven by lower milk prices.

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