Arla Foods has lowered its annual revenue expectations due to milk falling in price, as supermarkets see greater demand for own-label dairy products amid the cost-of-living crisis.
According to This is Money, the dairy company now predicts to achieve revenue of €13.2bn to €13.7bn (£11.3bn to £11.7bn), compared to a previous forecast of up to €14.2bn (£12.2bn).
The Danish-headquartered company had been impacted by a drop in milk prices due to rising production volumes and declining consumer sales, as well as elevated ingredients, packaging and energy costs.
As a result, net profit for the opening six months of 2023 totalled €103m (£88.5k), compared to €382m (£328.5k) for the same time last year.
In Arla’s largest market of the UK, where it has around 2,000 farmers, net turnover soared by 16.9% to £1.37bn even as branded products sales fell.
For example, Arla lowered prices and cut pack sizes across Lurpak products to support shoppers amid the cost-of-living crisis.
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Two months ago, the business warned of further price hikes and a ‘crisis in milk production’ if the UK government failed to ‘urgently’ fill labour shortages.
A survey of Arla UK’s farmer owners found that a majority were finding it harder to recruit staff compared to 2019, which it blamed on Brexit ending the free movement of workers between Britain and the EU.
Chief executive of Arla Foods Peder Tuborgh said: “We anticipate that inflation and its influence on consumer patterns will continue to mark the remaining part of 2023, putting pressure on branded volumes in most markets.
“However, we expect an increase in the underlying category growth to contribute to branded growth slowly picking up again.”
The dairy company also removed coloured milk bottle caps earlier this year, replacing them with clear tops in a bid to improve recycling rates and limit plastic waste.
