Arla Foods invests in Brazilian market

The Arla Foods wants to take advantage of the expansion of dairy consumption in Brazil to boost its exports. Partner of Force almost 30 years, the Scandinavian cooperative recently decided to release some of its brands in the Brazilian market. The goal is to conquer a niche willing to pay more for imported from tradition, quality and origin. Targeting this segment, the Arla Foods intend to defy the economic crisis in Brazil, which may delay its plans to grow in the long term. "We assess the prospects for the dairy consumption in Latin America and in Brazil for the next 15 years and we decided that it's time to get hard in these markets", says the commercial Director of Arla Foods in Force, Kristian Lerche Nielsen, Broadcast Agro, real-time service State Agency.
Originally from Sweden and Denmark, Arla is the seventh largest dairy company in the world by revenue, according to Rabobank. In Brazil, the company disbanded last year of its stake in Dan force, partnership with Brazil in 1986, in Exchange for 8% of the voting capital of the Force. With the agreement, the Arla left the Danube and had greater access to the partner's distribution network, in line with its plan to export more to the country. "It wasn't exactly a new strategy, but it made us get closer to the consumer," says Nielsen. The change also allowed the Arla create a business unit within the Force itself-and it is from her that the Director coordinates the projects for Brazil.
In the new phase, the first step of the cooperative was to study the national market. "We saw that there is an audience in Brazil seeking products made safely and they have history and quality. Is a consumer who is interested in gastronomy and therefore puts in the food, "says Nielsen. The company already provides inputs to production through its ingredients Division, but the Arla Foods decided to bring the national retail their 113-year tradition butter, Lurpak. The cooperative does not report the performance of sales, but says he is focused on making Brazilians diversify the uses that attach to the product. "Butter is not just to pass on the bread," says Nielsen.
In addition to the butter, the Arla is expanding the portfolio of Blue Ribbon of the Force with their brand cheeses Castello, produced since 1893 in Denmark. Before, the distribution of products that the company already had in Brazil was made by the Danube. The strategy aims at the next few years, since the Country, according to Euromonitor International, should become the fifth largest market of cheeses until 2020, with expected annual revenue at $ 9.9 billion.
In his research, the cooperative also reports that there are more Brazilian consumers concerned about the origin of milk and with the deal of the animals. Organic products are also on the radar of the company. "They belong to a niche market, but as the Arla Foods is a large producer of organic, there is the possibility to bring them here," says Nielsen.
Crisis
The plans are maintained even with the economic crisis that affects the consumption in Brazil. The cooperative acknowledges that the current scenario is challenging, but says its plans are long-term. "Unfortunately Brazil is a country that passes many times by crises, but this will also be overcome. The confidence of Arla Foods in Brazil follows the same. The last months of 2015 will not be easy, but in 2016 the market will grow again, "says Nielsen.
One of the major concerns of the Arla is the Exchange variation, which can increase or reduce the competitiveness of their products in the eyes of Brazilians. However, the commercial Director, says that the number one fear is the uncertainty in the political scenario. "Of course we're concerned with the appreciation of the dollar and the euro, but the main thing is the political situation, you can catch a lot," he says. Among them, part of the expansion project. "Let's be a little bit insertion plans, since imported products are going to be a little more expensive. But the segment is one in which the audience is willing to pay more for quality, "he says.
Emerging
The cooperative has the bold plan of surfing the wave of emerging and increasing in almost 80% its revenue in these markets. The Division of Arla responsible for answering these countries, the Consumer International (CIN), aims to increase the revenues of? 1.4 billion in 2014 to? 2.5 billion in 2017. To this end, the CIN bet in China and Russia and is increasing its presence not only in Latin America but also in Southeast Asia and in Australia.