COPENHAGEN, Feb. 18 — Denmark-based dairy cooperative Arla Foods anticipates a decline in global dairy prices in 2026 due to a projected surplus in milk supply, despite reporting record annual revenue of 15.1 billion euros ($17.9 billion) in 2025.
The cooperative, which produces brands including Lurpak butter and Castello cheese, attributed the expected increase in milk production to favorable weather conditions and strong forage harvests across Europe throughout 2025, resulting in one of the largest increases in milk volumes in recent years. Total milk production rose to 14.3 billion kg in 2025, compared to 13.7 billion kg in 2024.
Arla CEO Peder Tuborgh acknowledged the challenges posed by falling dairy prices but suggested they could stimulate 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,” Tuborgh said in a statement.
The 9% increase in revenue for 2025 was partially driven by elevated global dairy prices throughout the year. However, Arla forecasts revenue will decrease to between 13.3 billion and 14.1 billion euros in 2026, citing the anticipated milk supply surplus and continued market volatility.
Arla, owned by more than 12,000 dairy farmers across seven Northern European countries, expects its strategic brands segment to grow between 1.0% and 3.0% in 2026, signaling a focus on branded products despite the broader revenue challenges. This strategic shift comes as the dairy industry faces increased competition from major players like Danone and Nestle, as highlighted in a recent market report.
The competitive landscape within the dairy blends market includes key vendors such as Fonterra Co-operative Group, Arla Foods, Lactalis, Agropur, FrieslandCampina, Kerry Group, Danone, Abbott Nutrition, Nestle, and Cargill, according to market research.
Arla’s announcement follows a year of mixed financial results across the dairy sector. Danone and Nestle, along with Arla, have all recently reported their financial results, with a common focus on growth areas such as high-protein dairy products and products supporting preventative care and immunity.
Context, a sustainability consultancy, recently ranked Arla and Nestle as leaders in sustainability approach and communications among the world’s top dairy companies, assessing ten companies against seven strategy and communications criteria. The report also included Danone, Fonterra, FrieslandCampina, and Saputo.