25 per cent of the milk supplied to Arla Foods by Swedish and Danish dairy farmers is processed and sold through Global Ingredients. This business area covers a wide range of powder products sold in more than 100 countries across the world.
”Global Ingredients is an important business area which, like our other areas, covers products that span the entire ”milk processing scale,” explains Group Director Peter Lauritzen, Head of Global Ingredients.
“Our task is to move the products up the scale so that we obtain the best price for the raw materials.”
Arla Foods’ ingredients business is divided into two main business areas: milk proteins and milk powder. Global Ingredients’ products are not as commonly known as milk, butter and cheese and few realise that, for instance, whey from Arla’s cheese production is processed into milk proteins that are widely used in the food industry. Consequently, Global Ingredients does not always attract the same attention as other business areas within the Arla Foods group. Yet within Ingredients itself, there is clearly considerable pride in its worldwide achievements. This is particularly due to the fact that while Arla Foods currently places huge emphasis on “globalisation”, Ingredients has always operated on an international scale as evidenced by the joint ventures in China, Argentina and Germany and sales of milk powder in retail packs in e.g. the Middle East, the Caribbean and Bangladesh. Moreover, as for the commodity products at the bottom of the processing scale, Peter Lauritzen points to the skilled people in the trading department, who obtain the best available prices in world markets.

Global Ingredients is a highly complex business area, a fact that is reflected in the diversity of the challenges for 2007 as Peter Lauritzen sees them: ”With regard to milk proteins, which are added value ingredients for global food producers, we saw progress in all areas in 2006,” he says. “Here the biggest challenge is to procure the raw materials, i.e. whey from cheese production. Our own dairies have full order books for 2007 so we’re entering into partnerships in Europe and North America in order to secure future growth. Our growth target for 2010 is to contribute to the milk price by a further 1-2 øre.”
New markets for milk powder in retail packs are Algeria and Vietnam, two countries where Arla’s milk powder brands, Milex and Dano, will be launched in 2007. ”We want to spread our business and go for the markets where we find them,” Peter Laurtizen says, emphasising the decision to build a powder factory in China as one of the major challenges within this area.

One of Global Ingredients’ basic tasks is to cope with fluctuations in the milk weighed in during the year. This will, for example, be managed through selling milk powder in world markets. Following the commissioning of the powder factory at Vimmerby in Sweden, Arla mainly produces full-cream milk powder which has a much higher added value than skimmed milk powder, which represents the low end of the market.

”Vimmerby provides us with an up-to-date, future-proof plant. We’ve also upgraded our facilities in Denmark,” he says. “We must ensure that we maximise the returns from our plants and have set ourselves the target of increasing our utilisation of capacity by 5 per cent in 2007 based on the existing plants,” says Peter Lauritzen.

With regard to sales of milk powder in world markets, the business, as was the case in 2006, is sensitive to fluctuating prices, the dollar rate and the continuing falling subsidies from the EU.