Friday, 15 April 2016 08:55

European co-op eyes US cheese market

Written by 
by US consumers is cheddar. by US consumers is cheddar.

European dairy co-op Arla Foods is joining forces with Dairy Farmers of America (DFA) to set up a cheese plant in the US, the world's biggest cheese market.

In their first collaboration ever, the two farmer-owned co-ops plan to look into building a plant to make premium cheddar.

The joint cost will be US$58m of which Arla covers 20% (US$11.6m).

A third of the cheese bought by US consumers is cheddar. However, very few brands there make cheddar using the highest quality available milk -- without growth hormones or artificial ingredients.

"Together with Dairy Farmers of America and eight of their farmers, who will supply the raw milk, we will explore the opportunities for premium quality cheddar under the Arla brand," says Arla chief executive Peder Tuborgh.

"Adding cheddar to our US portfolio will make us more attractive to the retailers and help increase the sales of our European products made from owners' milk."

DFA president Rick Smith says it is pleased to be linking with Arla.

"Arla and DFA share the same passion for providing the highest quality products... [sourced] from dairy farmers who employ sustainable and transparent farm practices."

The partners will build on a production site in western New York State where the eight farms supplying the raw milk are located. The farmers are members of DFA and will supply about 70,000t of raw milk annually, to quality standards similar to Arla's programme Arlagården.

The US market has a quota regime that imposes limits on Arla importing European cheddar.

Pinpointing the growth targets

The US market is one of six growth regions pinpointed in Arla's strategy 'Good Growth 2020'.

The goal is to become a top 10 player in the retail cheese market by growing its business beyond the deli section into the dairy aisle, where 92% of US cheese sales take place.

A newly launched big bet in the dairy aisle is Arla branded cream cheese, which has no artificial growth hormones, artificial ingredients or flavours.

"US consumers are increasingly looking for food products they can feel good about serving and consuming from a better-for-you standpoint," says head of Arla Foods USA, Don Stohrer Jr.

"This is exactly the position we have created for the Arla brand with its authenticity, transparency and great taste. It's an attractive position that doesn't now exist in the US dairy aisle or the cheddar segment. Our expectation is that the new cheddar products will create a halo effect for the cream cheese and other Arla branded products."

The joint venture will be owned 70% by DFA, which also holds the management role, 20% by Arla and 10% by the eight farmers who supply the milk. Thirty people are expected to be employed.

On-site construction will begin later this year, to start producing in the autumn 2017.

More like this

Arla invests in solar power

European dairy giant Arla Foods will be using solar energy to meet one-third of its electricity consumption within two years.

Cheese name ruling brings hope

New Zealand cheese processors are welcoming a US court decision to reject Europe's bid to have exclusive use of the Gruyére cheese name.

Cheesed off

OPINION: Fonterra's plan to trademark Maori words used for its Kapiti cheese range is cheesing off some in Maoridom.

National

Feds stalwart to step down

Outspoken Federated Farmers leader Chris Lewis is stepping down from the farmer lobby after 17 years of service.

Machinery & Products

India boosts fert subsidy

India plans to double its budgeted 2021-22 fertiliser subsidies to a record of more than 1.55 trillion rupees (US$20.64 billion)…

Kicking lameness into touch

Lameness in dairy cows can have a significant effect on a businesses' bottom line, with vets suggesting that each case…

Single row concept delivers results

While Controlled Traffic Farming (CTF) has become increasingly popular over the last decade, German company Amazone is looking to take…

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Fake and cheap

OPINION: First they demanded plant-based 'milk', now they want it priced cheaper than real milk.

Cannon fodder?

OPINION: The recent high-profile Mycoplasma bovis announcement from the Government in Hamilton featured Prime Minister Jacinda Ardern and Agriculture Minister…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter