FDBusiness.com

In June Arla entered a ten-year contract with Chinese food company Biostime to produce up to 20,000 tons of Danish milk powder for the infant formula market annually for the next ten years. Consequently, Arla is now planning to expand its Arinco milk powder facility in Denmark. The investment involved is about DKr165 million (Eur22 million), of which Biostime will finance half. Work on the expansion is scheduled to commence in October.

“We expect that this increased production for the Chinese market will create about 30 new jobs at our facility between now and 2014. The investment also means that we can introduce more automated processes and thus make production at Arinco even more efficient. So we will produce more, and in a more efficient manner,” says Mogens Bøgh Pedersen, Arinco site director.

Arla already exports very refined milk powder and infant nutrition products to China and the high quality of the Scandinavian products was one of the main reasons that Arla was chosen as supplier.

The contract with Biostime came in the wake of Arla’s strategic agreement with the leading Chinese food company, COFCO, on joint ownership of China’s largest dairy company, Mengniu Dairy Group. The agreements are intended to strengthen Arla’s presence and long-term profitability in the Chinese market, which is defined as a strategic growth market in the Arla Group strategy.