Arla Foods, a Danish multinational dairy cooperative, is investing US$43.34 million in its Esbjerg, Denmark, dairy to meet "increased global demand" for on-the-go, chilled coffee drinks. Arla manufactures milk-based coffee products in Esbjerg, Denmark, using milk from Arla Foods' farmer-owners as well as 100 percent Arabica coffee from the Starbucks Coffee Company.
The partnership with Starbucks began in 2010 with the goal of launching new products in over 43 countries across the EMEA region. Arla claimed in 2018 that Starbucks' RTD business had grown by an average of 40% per year in EMEA since the initial agreement was signed.
That same year, Arla Foods and coffee chain Starbucks signed a new 21-year strategic licencing agreement under which Arla Foods would manufacture, distribute, and market Starbucks ready-to-drink (RTD) products in Europe, the Middle East, and Africa (EMEA).
According to an Arla spokesperson, the expansion is timely because the ready-to-drink coffee beverage category has grown by an average of 20% per year and is expected to grow by nearly 34% in 2021.
According to an Arla spokesperson, the expansion, which will begin in the coming months and be completed by the end of next year, will increase the company's capacity by approximately 20%.
"We are investing EUR41 million (US$43.1 million) in the dairy to expand production, packaging lines, and cooling areas because demand has outgrown the dairy's capacity," a spokesperson said.
Starbucks has a similar agreement with the Swiss food company Nestlé. The US$7.15 billion distribution agreement, known as the "global coffee alliance," was reached just a month before the one with Arla went into effect.
Starbucks consumer and foodservice products have been licenced globally by the world's largest food and beverage company, allowing them to be marketed outside of the company's coffee shops. Nestle claims that this transaction provides it with a strong platform for continued growth in North America, with leadership positions in premium roast, ground, and portioned coffee.
