Arla Foods proposes €107.7M investment to strengthen UK milk production

Arla Foods plans to invest €107.7 million (US$112.7 million) in establishing an ultra-high temperature (UHT) Centre of Excellence in Scotland to expand its milk production capabilities across the UK. The facility will be located at the firm’s Lockerbie site and focus on advancing its UHT and Lactofree technologies.

UHT processing of milk involves heating for 1-8 seconds at 135-154°C and then packing it aseptically for shelf stability.

“We have chosen Lockerbie as a future UHT centre of excellence in the UK as it allows us to build scale, drive significant efficiencies and strengthen our resilience,” says David Boulanger, executive VP and head of supply chain at Arla Foods. 

“Located close to a large milk pool, Lockerbie brings additional sustainability advantages with our recently invested anaerobic digestion plants.” 

Employee impact

Some employees based at two UK sites are expected to be impacted as a result of the proposed investment, which includes a proposed closure of its Settle facility, says the company.

“There are no immediate changes proposed; however the anticipated change date is from the second half of 2026, if the proposals go ahead.”

The centre at Arla’s Lockerbie site will focus on advancing its UHT and Lactofree technologies (Image credit: Arla Foods).Boulanger says: “This investment for Lockerbie implies that we are proposing to move some production from other sites in the UK, and as a result, will potentially impact some of our colleagues in Stourton and Settle.”

“At Arla we are committed to supporting all colleagues through periods of change and we understand that this will be a time of uncertainty for everyone who works across these sites. We will be entering into a period of consultation with all colleagues affected by these proposals.”

Tapping British dairy

According to the Agriculture and Horticulture Development Board, British milk production is forecast to grow by 1.1% in 2025. This is despite global risks from fluctuating commodity prices and disease outbreaks, which could still disrupt the upward trajectory, warns the organization.

Arla Foods has been investing in British dairy for a while. The current commitment builds on over €355 million (US$371.65 million) in capital allocated to UK sites last year, highlights Mark Boot, executive VP Europe at Arla Foods. This includes €210 million (US$219.9 million) in its mozzarella operations in the Taw Valley creamery in Devon.

This latest initiative reflects “Arla’s confidence in the future of British dairy,” Boot adds.

Last week, the firm reported revenue of €13.8 billion (US$14.4 billion) and a net profit of €401 million (US$418.8 million) in its 2024 financial report, driven by improved consumer purchasing power across Europe.