Sales Stall at Lurpak Firm Arla After Shoppers Cut Back Spending
In a recent announcement, the Lurpak parent company Arla disclosed that its sales dipped slightly in 2023 as a large number of consumers opted for less expensive and own-brand products, reflecting the intensified pressure on household budgets.
The dairy conglomerate observed a more positive trajectory in the latter half of the year when a resurgence of customer interest in its product lineup, including Castello cheese, was noted. Despite this uptick in brand loyalty, Arla, a cooperative that boasts over 2,000 British farmers among its members, projected a cautious outlook for the forthcoming year. The company highlighted concerns over potential revenue decreases and the unpredictability of market conditions.
A closer look at the figures reveals Arla’s total revenues for the past year standing at 13.7 billion euros, a slight retreat from the 13.8 billion euros recorded in the previous year. This marginal decline was attributed to the adverse influence of “negative currency effects” over the course of the year.
On a more localized scale, Arla’s sales within the UK experienced a 2.4% growth, reaching three billion euros. This growth, albeit positive, marked a significant deceleration from the 17.5% surge seen the year before, attributed to a steep decrease in inflation which consequently led to lower diary product prices.
Bas Padberg, Arla Foods UK’s managing director, provided insight into the company’s performance amidst these challenges: “As we saw in the first half of 2023, inflationary pressure continued to dominate. However, thanks to the strong execution by our farmer-owners, employees, and management, Arla has demonstrated its ability to adapt to challenging market conditions.”
Padberg further emphasized the company’s role and responsibilities: “As the UK’s largest dairy cooperative and supplier of some of the UK’s best-loved brands, it’s important that we ease pressures on cash-strapped shoppers when we can, as well as returning a fair price to our farmers so we can keep supermarket shelves full. Arla’s brand portfolio demonstrated its robustness in volatile conditions, and we made a strong recovery in the second half of 2023 with strategic branded volume growth.”
Looking ahead, Arla anticipates the persisting “volatile market conditions”, a situation it partially attributes to geopolitical tensions, will “continue to impact the business in 2024”. Consequently, the group has projected a narrower revenue forecast for 2024, ranging between 13.2 billion euros and 13.7 billion euros, this outlook is underpinned by expectations of moderated pricing.
The delicate balance between maintaining consumer affordability and ensuring fair compensation for its farmer members underscores the complexities facing Arla and similar entities navigating the tumultuous dairy market landscape. As global conditions continue to evolve, so too will the strategies employed by these pivotal industry players to sustain their operations and meet the demands of their diverse stakeholder base.
