Arla Foods is investing DKK200 million (US$29 million) in its Esbjerg Dairy Center in Denmark, wher it manufactures Starbucks and chocolate milk business Cocio’s ready-to-drink (RTD) products. The move targets the brands’ growth in Europe, the Middle East and Africa (EMEA).

The dairy cooperative plans to use the funds for a “mix of new buildings, processing equipment and maintenance,” Christian Fischer, senior VP for Milk-based Beverages at Arla Foods, tells Food Ingredients First.

“We are expecting growth for both brands across markets in EMEA and the investment is to ensure that our production facilities are able to accommodate that growth.”

The investment comes on the heels of the dairy giant’s positive growth in sales volumes (+15.7%) of Starbucks RTD products last year, despite adverse impacts to international markets by nclick="updateothersitehits('Articlepage','External','OtherSitelink','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products','341916','https://www.foodingredientsfirst.com/news/arla-group-half-year-revenue-hits-%E2%82%AC7-billion-amid-inflationary-pressure.html', 'article','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products');return no_reload();">inflation and economic uncertainty. The total Arla Group revenue ended at €13.7 billion (US$ 14.8 billion), states the company’s 2023 annual report.

Arla Foods has been manufacturing and marketing drinks for Starbucks since 2010. It acquired Cocio, which produces chocolate milk mainly for the Danish market, in 2008.

Rise in protein ingredients
Protein ingredient use in F&B launches is gaining ground, with a 4% growth from April 2019 to March 2024, indicates Innova Market Insights’ data. Brands are increasingly emphasizing the “high protein” claim in NPD.

Fischer acknowledges the trend: “The RTD coffee category continues to grow but protein drinks has now become the fastest growing subcategory within Milk based Beverages. We saw our Arla Protein brand grow by 60% in 2023 across categories.”

Under its Arla Protein brand, the company manufactures protein-rich RTD coffee, chocolate milk, cottage cheese, pudding and Skyr yogurt ranges in Denmark, Finland and the UK.

The European dairy cooperative launched its Arla Skyr and Arla Protein brands in the nclick="updateothersitehits('Articlepage','External','OtherSitelink','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products','341916','https://www.foodingredientsfirst.com/news/arla-foods-and-solinest-team-up-on-new-dairy-brands-for-france-based-retailers.html', 'article','Arla Foods scales production facility for Starbucks and Cocio ready-to-drink products');return no_reload();">French market last year following positive market reaction from other European countries.

“Milking” beverage innovation
Fischer also believes the Milk based Beverages category is showing “strong growth” and holds potential.

“As Arla Foods, we operate in the three biggest segments: RTD coffee with Starbucks, chocolate milk with Cocio and Matilde and protein drinks with Arla Protein and we are therefore well-equipped to drive further growth.”

“Starbucks and Cocio are both strategic brands for Arla Foods and we will continue to drive growth here.”

With Starbucks, Arla Foods recently launched protein drinks with coffee in the UK in three variants — Caffé Latte, Chocolate Mocha Flavor and Caramel Hazelnut Flavor. The RTD beverages are formulated using a smooth blend of Starbucks Arabica Coffee and contain 20 g of protein per bottle.

The chilled beverages are designed to “support active lifestyles,” said Starbucks.

The RTD products have received “strong initial results,” Fischer reveals. “We intend to roll these products out into more markets.”

“On Cocio, we have launched Cocio Delight, a product without added sugar. Also, here we see a strong demand from consumers and we will continue to drive this proposition forward,” he concludes.