Arla Foods is investing more than €63 million to expand production of skyr and cottage cheese in Germany and Sweden as demand for high protein dairy products continues to rise across European markets.
The farmer owned dairy cooperative is committing €35 million to its Upahl facility in Germany, where the investment will increase skyr production capacity. A further €28.3 million will go into expanding cottage cheese production and modernising the Falkenberg dairy in Sweden.
Brandspur Brand News reports that Arla’s latest spending is aimed at keeping pace with changing consumer preferences while increasing the value generated from milk supplied by its farmer owners.
The company said skyr volumes across its European markets have grown by more than 33 per cent over the past three years, while cottage cheese volumes have increased by 25 per cent during the same period.
The Upahl project will become part of Arla’s wider European skyr production network, with commercial production from the expanded capacity expected to begin in the second half of 2028.
The investment builds on €51 million that Arla has committed since 2023 to improving skyr capacity and efficiency at its dairies in Denmark, Germany and Sweden.
Arla described skyr as one of the fastest growing dairy categories in Europe, driven by consumers looking for protein rich products that can be incorporated into everyday meals and snacks.
At Falkenberg, which Arla identifies as Europe’s largest cottage cheese production site, the €28.3 million investment will increase output and upgrade the facility. The work is expected to be completed progressively through 2028.
Cottage cheese has also recorded strong growth as consumers place greater emphasis on protein, while its versatility has helped it gain a wider role across meals and snacks.
According to Arla, market growth over the past year ranged from 13 per cent in Sweden to 37 per cent in Denmark and the United Kingdom, while the Netherlands recorded 38 per cent growth.
Arla said it is the largest branded cottage cheese supplier across its European markets, with particularly strong positions in Sweden and Denmark.
The Falkenberg expansion follows €34 million invested in Swedish cottage cheese production since 2025. Arla also strengthened its international cottage cheese business earlier this year through the acquisition of Australian producer Brancourts.
Arla Foods Chief Executive Officer, Peder Tuborgh, said the investments would help the cooperative respond to sustained demand for dairy products that combine protein, convenience and taste.
The company expects demand for both categories to remain strong and said the additional capacity would help it serve customers while creating longer term value from milk supplied by its farmer owners.
