Dairy giant Arla has announced that shoppers are likely to face higher milk prices later this year due to rising commodity costs. The maker of Cravendale warned of “uncertainty” in the market leading to decreased milk availability worldwide. Arla, a co-operative working with farmers across the UK, anticipates ongoing volatile market conditions in the latter half of the financial year. Despite this, the company noted that consumer spending has been strong amidst budget pressures in 2024.
According to Arla, consumer purchasing power has been resilient in the first half of the year, particularly in Europe where inflation is easing and wages are rising. This positive trend is expected to continue and drive increased demand for dairy products. However, the company highlighted that it remains uncertain how consumers will respond to the expected price hikes following the commodity cost increases.
Arla reported robust trading performance in the first half of 2024, with notable growth in its brand portfolio, including popular brands like Lurpak and Arla Protein. The company saw an overall volume growth of 11% across its brands, while branded revenues increased by 5.4%, although dairy pricing growth slowed down. Lurpak sales were singled out as particularly strong in the past six months.
Bas Padberg, managing director of Arla Foods UK, emphasized the company’s reinvestment in brands to provide value to shoppers and support farmers. He acknowledged that while consumer confidence is expected to remain high in the coming months, trading conditions may be more challenging due to rising commodity markets and the need to balance global supply constraints with growing dairy demand.
The warning about impending milk price rises coincides with Arla’s positive outlook for continued consumer confidence, but with a cautious approach as commodity prices surge and demand for dairy products increases. Shoppers at major supermarkets like Asda, Sainsbury’s, Tesco, and Aldi are advised to brace for higher milk prices in the near future.