Tesco sets milk contracts in UK

Arla Foods UK has confirmed that British supermarket Tesco has awarded a significant volume of Arla’s fresh liquid milk business to Müller Milk and Ingredients. However, the farmer-owned dairy business has retained large volumes in a long-term agreement. Tesco has confirmed that it will continue its long-standing relationship with Arla to build the co-operative’s growing own label and branded dairy business.

Peter Giørtz-Carlsen, executive vice president, Arla Foods UK, says, “While Arla is disappointed with the loss; Tesco continues to be an important and strategic customer. We have successfully strengthened the Arla business in 2015 through significant own label and branded volume growth in all categories as well as cost improvements. We are prepared and fit to meet the challenging market conditions.”

Will Hosford, chairman of the Arla Tesco Sustainable Dairy Group, and Arla farmer owner adds, “As a farmer-owned business, our priority is our farmers and we are working with them to mitigate the impact of this decision on our business. Market conditions are extremely tough at the moment and consequently Arla is considering the changes that it will need to make to address this difficult situation.

“Our core principal is one price for all where all farmers benefit from the success of our global business and leading brands. We believe that this principle will offer an increasingly compelling message to UK consumers.”