Arla is investing more than €63m to expand skyr and cottage cheese production in Germany and Sweden as demand for high-protein dairy products continues to grow across Europe.
The farmer-owned dairy company is investing €35m at its Upahl site in Germany to increase skyr production, alongside a further €28.3m at its Falkenberg dairy in Sweden to expand cottage cheese capacity.
Arla said the investments will help it respond to growing demand across European markets while increasing the value generated from milk supplied by its farmer owners.
The company has recorded significant growth across both categories in recent years. Skyr volumes have increased by more than 33% across Arla’s European markets over the past three years, while cottage cheese volumes have risen by 25%.
The growth reflects wider consumer interest in high-protein foods, with skyr and cottage cheese increasingly being used as everyday foods and snacks.
Peder Tuborgh, CEO of Arla Foods, said: “Consumer preferences continue to evolve, and we see growing demand for products with high-protein combined with convenience and great taste.”
Expanding skyr production
The investment in Upahl forms part of Arla’s wider expansion of its European skyr production network.
Originally associated with Nordic dairy traditions, skyr has become one of the fastest-growing dairy categories across Europe as consumers look for protein-rich products.
Arla said demand has outpaced available production capacity in several markets, prompting investment in both additional capacity and efficiency.
The €35m investment in Upahl follows €51m already invested by Arla since 2023 to increase skyr capacity and efficiency at its dairies in Denmark, Germany and Sweden.
The latest investment will further increase the company’s ability to supply growing demand across its European markets.
Cottage cheese capacity
Arla is also investing €28.3m at its Falkenberg dairy in Sweden, described by the company as Europe’s largest cottage cheese production site.
Cottage cheese has experienced particularly strong growth as consumers have incorporated the product into meals and snacks, with demand increasingly linked to interest in protein-rich foods.
Over the past year, market growth has ranged from 13% in Sweden to 37% in Denmark and the UK, and 38% in the Netherlands, according to Arla.
The investment will increase the company’s ability to supply the Swedish market and other European markets from Falkenberg.
It follows €34m of investment in cottage cheese production in Sweden since 2025, alongside Arla’s international expansion through the acquisition of Australian cottage cheese producer Brancourts earlier this year.
Investment in dairy capacity
The two projects form part of Arla’s broader investment in categories where it sees sustained consumer demand.
For the company, expanding production also provides a route to create additional value from milk supplied by its farmer owners while strengthening its position in growing dairy categories.
Tuborgh said the investments would help Arla continue supplying customers as demand increases.
“These investments ensure that we can continue meeting growing consumer demand, supporting our customers and creating long-term value from our farmer owners’ milk,” he said.
“The growth we are seeing in skyr and cottage cheese gives us confidence in the long-term potential of these categories.”
