Dairy giant Arla has issued a warning to shoppers, indicating that they can anticipate higher milk prices later this year due to increases in commodity costs. The maker of Cravendale milk highlighted that market uncertainty has led to reduced global availability of milk. Arla, a co-operative that works with numerous UK farmers, foresees ongoing volatility in market conditions for the remainder of its financial year. Despite this, the company noted strong consumer spending amidst budget pressures in 2024. Arla also mentioned that consumer purchasing power is expected to continue growing, particularly in Europe, with decreasing inflationary pressures and rising wages.
The company remarked on the potential increase in dairy demand but expressed uncertainty about how consumers will respond to the anticipated rise in retail prices following the commodity price hikes. Arla’s warning coincided with positive trading results during the first half of 2024. The company experienced an overall volume growth of 11% across its brand portfolio, with branded revenues increasing by 5.4%, although dairy pricing slowed down. Notably, Lurpak sales performed exceptionally well in the past six months.
Bas Padberg, the managing director of Arla Foods UK, highlighted the company’s continuous reinvestment in its brands to deliver value to shoppers and support the growth necessary to provide the highest possible milk prices to farmer owners. He underscored the strong performance of the branded range, driven by increased consumer purchasing power in the first half of the year. Looking ahead, Arla expects trading to be more challenging in the upcoming months due to rising commodity markets and a balance between reduced global milk supply and growing dairy demand.
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