Sector News

Arla Foods opens US$204M dairy plant to meet global milk powder demand

June 5, 2022
Consumer Packaged Goods

Arla Foods has unveiled its “biggest investment to date,” a 55-hectare production plant in Germany with the capacity to supply specialized long-life dairy products to 70 countries. The €190 million (US$204 million) investment in the facility is set to meet the demand for sustainable, nutritious dairy products such as drinking milk, cream, mixed milk drinks, condensed milk, sour cream, milk powder, butter and spreads.

The mega-facility is based in Pronsfeld and will draw milk from farmers in Rhineland-Palatinate, North Rhine-Westphalia, Luxembourg and Belgium, including Wallonia and Flanders.

The facility’s primary function is to increase the production of milk powder. It supports the company’s expected annual branded volume growth of 5-7% in international business, which is in line with its five-year strategy called Future26.

“We will strengthen and expand our business in international markets such as the Middle East, West Africa and Southeast Asia, where the demand for affordable, nutritious dairy products exceeds local production and supply,” says Peder Tuborgh, CEO, Arla Foods.

The global export focus will include China, Kuwait and the Maldives.

Producing long shelf life milk powder
The facility includes a production plant with a 51-meter-high drying tower that can process 685 million kilograms of milk a year. The end product will be around 90,000 metric tons of milk powder.

Milk powder with a long shelf life is particularly suitable for Arla Foods’ international markets, where milk powder is an integral part of the local diet, especially in fast-growing urban areas. The facility also manufactures products for B2B for the food industry, which processes milk powder into chocolate or baked goods.

Roughly 12 construction sites will be installed on the whole site over the course of the project, facilitating the expansion of the milk collection area and milk tanks to the energy supply and wastewater treatment plant.

Arla is present in more than 140 countries, with annual sales in its international business unit of €2,1 billion (US$2.3billion) last year.

In 2021, Arla Food Ingredients unveiled an innovation center to develop the company’s capabilities in dairy and whey ingredients.

Meeting GHG targets
The expansion of Pronsfeld dairy will help meet Arla’s climate goals within its operations. A new technical setup for electricity and heat generation called combined heat and power (CHP) and process cooling will reduce the carbon footprint and electricity consumption by about 1,800-megawatt-hours of electricity and about 1,200 metric tons of CO2e per year for the whole dairy site compared to a traditional cooling solution.

“This is an important step in the evolution of our manufacturing footprint toward more efficient and decarbonized dairy production, building on our strengths here in Germany and leveraging the latest technologies,” says David Boulanger, executive VP and head, Arla supply chain.

As there is currently no green energy alternative to the natural gas used for the new production facility Arla will purchase green electricity certificates corresponding to the CO2e emissions for both the gas and electricity as a short-term solution. In addition, Arla is looking into replacing 25% of the natural gas used in the new technical setup with hydrogen.

The company is one of the first farmer-owned dairy companies globally to have its 1.5 degrees target for operations of 63% reduction of greenhouse gas (GHG) emissions approved by the Science Based Target Initiative (SBTi) under the Paris Agreement.

By Inga de Jong


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