Chinese milk means big gains for Arla
The value of Arla’s stock in China’s largest dairy, Mengniu, has risen 65 percent, making Arla’s investment of 1.8 billion kroner now worth just under 3 billion kroner.
"We are very pleased,” Fred Juulsen, the head of Arla’s operations in China, told Jyllands-Posten newspaper.
These are heady times in the Chinese dairy industry, as demand is soaring due to the continued growth of the Chinese middle classes, but Mengniu’s success has still taken experts by surprise.
The company's turnover has increased by 20 percent, while earnings have improved by 27 percent.
More money, more milk
Experience from other Asian countries has shown that the consumption of animal foods like dairy and meat increases with purchasing power. And in China, the consumption of dairy products has increased by about 10 percent annually.
Mengniu had been involved in food scandals that affected the company’s bottom line. Juulsen said that Arla is working to rebuild credibility with consumers by instituting safety measures.
"We expect that Arla's sales in China will grow by 50 percent,” said Juulsen.
Arla sells a variety of milk products in China and is looking to add cheese and butter to what it now offers Chinese consumers.