Dairy giant Arla has issued a warning to shoppers about an impending increase in milk prices later this year. The company, known for brands like Cravendale, attributed the price hike to rising commodity costs and global milk supply issues. Arla, which supports numerous farmers in the UK, anticipates continued market uncertainty in the coming months. Despite challenging conditions, Arla noted a positive trend in consumer spending amid budget pressures in 2024.
The company foresees a rise in consumer purchasing power, particularly in Europe where inflationary pressures are easing and wages are increasing. However, Arla expressed uncertainty about how consumers will respond to the expected retail price surge following the commodity cost hikes. These warnings were delivered as Arla reported strong trading performance in the first half of 2024, driven by popular brands such as Lurpak and Arla Protein.
Arla’s overall brand portfolio experienced an 11% volume growth, with 5.4% increase in branded revenues despite a slowdown in dairy pricing. Lurpak sales were highlighted as particularly robust in the past six months. Bas Padberg, Managing Director of Arla Foods UK, emphasised the company’s reinvestment in brands to deliver value to shoppers and support farmers. He acknowledged the challenges posed by rising commodity prices and fluctuating global supply and demand for dairy products.
While confident in continued consumer confidence, Arla anticipates tougher trading conditions ahead as commodity markets surge. The company aims to navigate these challenges to ensure sustained growth and profitability for its brands and farmer owners. Shoppers should brace themselves for higher milk prices as Arla navigates the evolving market dynamics in the second half of the year.