This year marks a decade since European farmer-owned dairy cooperative Arla Foods and Starbucks partnered up to combine chilled coffee and milk for the ready to drink (RTD) market. The partnership makes note of “continuous growth in a high pace global market, in which unit production has increased by no less than 1,700 percent.” In an update, the companies peg the global RTD coffee market as one of the fastest growing in the RTD category, with last year’s sales up by 17 percent. Potential in the Europe, the Middle East and Africa (EMEA) region is also highlighted.

“The ready to go coffee category continues to grow very quickly and that means great potential for us. We reached an important milestone when we became the leading provider of milk-based beverages in Europe, the Middle East and Africa. This has shown us that consumers welcome the great taste and premium nature of the beverages and we want to build on that success,” says Hanne Søndergaard, Chief Marketing Officer (CMO) at Arla Foods. 

When Arla Foods and Starbucks joined forces in 2010, they started out in three markets. Today the products are sold in more than 43 countries across the EMEA region. The partnership is now targeting launches in new markets. Coupled with this geographic expansion, unit production has increased by 1,700 percent from 8 million units in 2010 to close to 144 million in 2019, sold in supermarkets and convenience stores around the world, they report.

“We have been fortunate to have a great team from both companies working together and we are delighted that our relationship continues to grow. From the beginning the partnership combined Arla’s extensive experience in manufacturing dairy beverages and our widespread supply chain setup with Starbucks’s unique coffee expertise,” says Søndergaard

Market potential in EMEA
Since Starbucks chose Arla Foods as its license partner in 2010, the business reports double digit annual growth, which is expected to continue over the next three years. The partnership maintains its status as the leading RTD brand in EMEA, attained in 2018.

In 2018, the companies signed a 21-year strategic licensing agreement, giving Arla Foods license to continue to manufacture, distribute and market Starbucks’ premium milk-based RTD coffee beverages for the EMEA region. “It is against this background of success that the RTD category will play an even bigger role in Arla Foods future strategy,” Arla Foods notes.

“Looking ahead we believe that innovation is the key to future success. We are committed to continuing to work closely with Starbucks to ensure that chilled coffee with milk stays a consumer favorite while we develop and grow the category in a sustainable way” says Søndergaard.  

The Starbucks chilled coffee range is produced at Arla Foods’ site in Esbjerg in Denmark with milk from Arla Foods’ 9,700 farmer owners and 100 percent arabica, ethically sourced coffee.