Arla increases investment in Argentina

By Dominique Patton

- Last updated on GMT

Related tags: Milk

Danish dairy group Arla Foods is increasing its investment in
Argentina by a further US$10 million to boost its processing
capacity and target new markets.

The company announced last year it would invest $20 million in expansion of its factory in Portena. On Friday it said it will add a further $10 million to bring in new equipment and processes that make better use of the raw material, whey, and produce ingredients for the ice cream and cheese markets. The Argentine factory currently produces added value whey protein powder sold as ingredients to the dairy and bakery industries. Current production, however, only uses 30 per cent of the total raw material. So far, humidity has made it impossible to use more, said a spokesman at the firm. The new investment will fund extra equipment including a spray tower to allow for 100 per cent use of the raw material. Previously the whey not used for food ingredients was sold on to the animal feed market. "The investment in a new spray tower will provide for the appropriate technology to produce high quality whey permeate powder and strengthen earnings from the already profitable Argentinean business,"​ said Arla. The additional investment will also help counter rising steel prices and the low dollar rate, said the firm. Larger quantities of processed whey will allow Arla to enter a new market, producing ingredients for ice-cream and cheese in Argentina. Both categories have seen strong growth in recent years. Ice-cream sales grew by 24.1 per cent in 2006, according to Euromonitor, creating a market worth some AP1039.3 million (€208.8m) during 2007. Cheese sales were up by 20.4 per cent in 2006 and valued at AP5.7 billion (€1.15bn) in the following year. Unprocessed cheese makes up a dominant share of the market (95 per cent) yet processed cheese is growing by around 20 per cent each year. "With this investment, we expect to become a significant player on the market for ice-cream and cheese ingredients. We see a great potential in that market, and having a locally based production is a real advantage to achieving success in that category,"​ said Arla's spokesperson. He did not reveal which ingredients will be produced for the Argentine market. The company makes a full range of functional milk proteins for cheese as well as ice cream. Arla has also invested in production plans in a number of emerging markets round the world, including China and Vietnam.

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