Arla says sales could slip this year as consumers cut back on dairy products

COPENHAGEN (Reuters) -Dairy producer Arla said on Tuesday that sales could slip this year after a flat 2023 as European consumers continue to cut back spending, although it sees some signs of improving demand.

Arla, one of the world’s biggest dairy producers, said dairy prices had recovered in the second half of 2023 as consumers had slowly returned to premium products such as Lurpak butter and Castello cheese. That trend was accelerating at the beginning of this year, it said.

“We are getting back to more normal balanced levels between branded and discounted products,” CEO Peder Tuborgh told journalists.

Still, a combination of overall lower prices and currency headwinds were expected to dent sales this year, the company said.

Arla said its expects sales this year in the range of 13.2-13.7 billion euro ($14.3-$14.8 billion), compared to flat sales of 13.7 billion last year.

Sales of Lurpak butter, which is sold in 100 countries around the world, and Castello cheese both rose by 3% in 2023, despite lower volumes sold.

Arla, which competes with companies like Danone and Nestle in the dairy industry, is owned by more than 8,000 dairy farmers in Denmark, Sweden, Britain, Germany, Belgium, Luxemburg and the Netherlands.

($1 = 0.9264 euros)

(Reporting by Isabelle Yr Carlsson, editing by Terje Solsvik, Jacob Gronholt-Pedersen and Susan Fenton)