Arla’s ingredients business has delivered an extraordinary year of growth. However, maintaining that pace will depend on one key factor: access to sufficient raw materials.
According to Arla’s annual report, revenue at Arla Foods Ingredients (AFI) increased by 43.1 per cent in 2025. The ambition is now to sustain annual growth of around 10 per cent in the coming years, in line with expectations for the global protein market.
Yet growth is not driven by demand alone. Supply is equally decisive.
Protein market in structural growth
AFI produces whey-based proteins and advanced ingredient solutions for customers worldwide, including applications in sports nutrition and other high-protein products.
Arla’s management highlights several structural drivers behind this development: a growing global middle class, increased focus on health and protein intake, and the expanding use of weight-loss medications. Taken together, these trends are creating stable, long-term demand for milk protein.
The ingredients business has therefore become a central value driver within the group — and a key contributor to this year’s overall results.
Raw material access a strategic priority
The main challenge, however, is not the market — but the availability of whey.
Whey is a by-product of cheese production and is therefore dependent on overall milk and cheese volumes. If the ingredients business is to achieve double-digit growth over several years, secure access to sufficient raw material will be essential.
This is also one of the factors behind Arla’s planned merger with DMK, which is awaiting competition authority approval in the first half of 2026. Access to a larger combined milk pool would strengthen the raw material base and expand capacity for ingredient production.
From volume to value creation
The development reflects a broader shift within the dairy sector: value creation is moving from volume towards high-value ingredients.
Where traditional bulk markets tend to be more cyclical, the ingredients segment operates increasingly in specialised niches with stronger margins and closer customer collaboration.
For dairies, this means that raw material utilisation and product mix are becoming strategic decisions — not merely operational ones.
By Maja Løvstrup
Source: FødevareWatch
Photo: Arla Foods
