Dairy firm Arla has said that greater consumer adoption of its household dairy brands such as Lurpak and Puck 'more than offset' offset declines in its foodservice business in the first half of its financial year.
The business saw group revenue rise 2.8% to €5.4 billion in the first half, compared to €5.2 billion in the corresponding period last year, while its Europe business posted revenue growth of 0.9%.
'Abnormal Times'
“It has truly been abnormal times this year and I am very proud of our people and our results," commented Peder Tuborgh, Arla chief executive.
"We quickly channeled milk from our Foodservice business into retail and successfully maintained a steady flow of products in demand, while our Foodservice business found creative solutions to support their customers. This shows just how robust and agile our cooperative really is for our dairy farmers."
Arla said that while its foodservice business 'declined rapidly' during the period, demand for household dairy products for in-home cooking and increased consumption surged, with Lurpak growing by 17.4% in volume and Puck growing by 16.7% in volume.
Its core Arla brand posted a 3.3% increase in volume, despite being offset by the closure of the foodservice market, while its Arla Milk Based Beverages arm reported 13.1% volume growth, mainly driven by its Starbucks ready-to-drink range.
“As consumers around the world were forced to stay home, we expected our household brands to do well and they certainly have," Tuborgh added.
"During the lockdown, people have loved to cook with our Lurpak butter and dairy has seen a boost in relevance in households across markets as consumers have valued our products. As countries are opening again, we are looking at how we best continue to deliver our trusted brands to customers and consumers."
International Performance
The group's Europe zone reported revenue of €3.18 billion in the period, up 0.9% despite a 'steep reduction' in foodservice sales.
Its International business saw revenue of 22.1% to €1.024 billion, which the company said was its strongest revenue performance in the past five years. The Middle East and North Africa regions were the main drivers for this growth, it added.
Its Arla Foods Ingredients (AFI) business, meanwhile, posted revenue growth of 2.4% to €360 million, boosted by sales of value-added products within the paediatric, health & performance and food segments.
Forward Planning
Looking ahead to the remainder of the year, the company said that its 'Calcium' transformation programme, which delivered savings of more than €69 million in the first half despite the pandemic, should put it in good stead, despite the continued volatile situation and the coming Brexit deadline.
“On the short term, we are looking at two very severe and unpredictable risks for the second half of 2020," said Tuborgh.
"One being the COVID-19 pandemic that continues to require us to be in crisis mode along with the potential adverse consequences surrounding Brexit negotiations. On the longer term, we need the business to be ready to navigate successfully through the expected global recession."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
