Lurpak maker Arla says higher pricing set to cause weaker sales volumes

Dairy giant Arla has said it plans to cut costs in 2025 as it cautioned that higher prices are likely to impact customer demand.

The company, which makes Lurpak and Cravendale, said it expects to secure up to 110 million euros (£91.1 million) of cost savings this year.

It came as the co-operative, which runs farms across the UK, said it faces challenges including “consumer uncertainty”.

It said lower inflation and higher wages helped to improved customer spending in 2024.

However, prices in the sector have lifted more recently, with fresh data from the ONS showing that average butter prices were up 18.3% year-on-year in the UK in January.

Arla said its volumes are therefore expected to slip by between 1% and 2% this year as shoppers react to price increases.

It said however that revenues are expected to grow to between 14.5 billion euros (£12 billion) and 15.3 (£12.7 billion) amid the boost from pricing.

The firm revealed on Wednesday that revenues grew slightly to 13.8 billion euros in 2024, from 13.7 billion the previous year, as weaker pricing was offset by “stable” consumer demand.

Last year, UK revenues dipped marginally despite a 7.6% increase in volume sales, including positive demand for Lurpak.

Jan Toft Norgaard, chair of Arla Foods, said: “Arla’s strong results in 2024 are a testament to the dedication and skill of our farmer owners and employees.

“Our competitive milk price and financial performance reflect our ability to navigate a complex market landscape effectively and deliver value to our stakeholders.”