Finance
Lurpak-maker Arla forecasts drop in dairy prices after supply surge in Europe
Published by Global Banking & Finance Review®
Posted on February 18, 2026
2 min readLast updated: February 18, 2026
Quick Summary
Arla Foods predicts a decline in dairy prices in 2026 due to increased milk supply in Europe, impacting revenue and consumer spending.
Arla Foods Predicts Decline in Dairy Prices Amid European Supply Surge
Impact of Supply Surge on Dairy Prices
COPENHAGEN, Feb 18 (Reuters) - Denmark-based Arla Foods, producer of Lurpak butter and Castello cheese, expects surplus global milk supplies to drive down dairy prices and bolster consumer spending in 2026, it said on Wednesday, after reporting record annual revenue in the past year.
Factors Driving Milk Production
The cooperative, which competes with the likes of Danone and Nestle, attributed a 2025 surge in milk production to favourable weather and strong forage harvests across Europe, which led to one of the sharpest increases in milk volumes in recent memory.
Revenue and Market Expectations
"The large increase in supply that occurred in the fourth quarter is expected to continue to affect the market in early 2026 and put pressure on global dairy prices," Arla said in a statement, while projecting "partial normalization" of market dynamics later in the year.
Strategic Brand Growth
Its total milk production rose to 14.3 billion kg in 2025 vs 13.7 billion in 2024.
GROWTH IN STRATEGIC BRANDS
Arla's CEO Peder Tuborgh acknowledged the challenges of lower dairy prices but noted their potential to strengthen consumer demand. "When prices adjust, we expect consumers to return to dairy products with renewed purchasing power, which should drive growth for our strategic brands," he said.
Revenue reached 15.1 billion euros ($17.9 billion) in 2025, up 9% from the year before, driven partly by a global increase in dairy prices throughout the year. For 2026, however, Arla forecast revenue to decline to between 13.3 billion and 14.1 billion euros, citing elevated milk supply and continued market volatility.
The cooperative, owned by more than 12,000 dairy farmers across seven Northern European countries, said its strategic brands segment is expected to grow between 1.0% and 3.0% in 2026, highlighting a shift toward branded products despite challenges to overall revenue.
($1 = 0.8450 euros)
(Reporting by Louise Rasmussen and Soren Jeppesen)
Key Takeaways
- •Arla Foods forecasts a drop in dairy prices in 2026.
- •Increased milk production in Europe is a key factor.
- •Arla's revenue reached 15.1 billion euros in 2025.
- •Strategic brand growth expected despite price challenges.
- •Market volatility anticipated to affect 2026 revenue.
Frequently Asked Questions about Lurpak-maker Arla forecasts drop in dairy prices after supply surge in Europe
1What is dairy price decline?
Dairy price decline refers to the reduction in the market prices of dairy products, often influenced by supply and demand dynamics, production levels, and market conditions.
2What is milk production surplus?
A milk production surplus occurs when the amount of milk produced exceeds the market demand, leading to lower prices and potential waste if not managed properly.
3What are strategic brands?
Strategic brands are products or services that a company focuses on to drive growth and market share, often supported by targeted marketing and consumer engagement strategies.
