Dairy cooperative sees strong growth in protein ingredients as prices and global demand accelerate
Arla Foods is preparing to increase investment in its ingredients business as global demand for dairy proteins continues to strengthen, with the company’s chief executive describing demand for protein ingredients as “super high.” The development comes as rising interest in nutrition, sports nutrition and protein-rich products pushes demand and prices for whey and other dairy-based ingredients higher.
The announcement follows a strong first half of 2026 for Arla, with the cooperative reporting substantial growth in its ingredients business alongside improving performance across its branded portfolio. Arla Foods Ingredients (AFI) recorded revenue of €867 million during the first half, representing a 19.3% increase from the same period a year earlier.
Protein ingredients emerge as a major growth opportunity
Arla’s ingredients business has benefited from favourable market conditions and robust demand across key segments. Higher whey protein prices were a major contributor to the increase in revenue, reflecting strong demand for whey-based nutritional ingredients.
The company said the growth is being supported by broader health and nutrition trends, including increasing interest in protein-rich diets and nutrition linked to GLP-1 weight-management treatments. Value-added ingredient volumes also increased, indicating that the opportunity is not being driven solely by higher prices.
Arla’s branded protein products have also performed strongly. Arla Skyr recorded growth of 39.6%, while Arla Protein increased 34.4% during the first half of the year. The performance highlights the wider consumer shift towards products positioned around protein and nutrition.
Strong first-half performance supports investment
Arla Foods reported group revenue of €7.6 billion for the first half of 2026, compared with €7.5 billion during the same period in 2025. Net profit rose to €213 million from €158 million a year earlier.
Overall strategic branded volume-driven revenue increased 6.7%, marking a significant recovery from the previous year. Growth was supported by renewed consumer demand and stronger performance across several of Arla’s major brands.
| Arla Foods H1 2026 | Result |
|---|---|
| Group revenue | €7.6 billion |
| Net profit | €213 million |
| AFI revenue | €867 million |
| AFI revenue growth | 19.3% |
| Branded volume-driven growth | 6.7% |
| Arla Skyr growth | 39.6% |
| Arla Protein growth | 34.4% |
Investment expands across Arla’s production network
Arla invested €322 million across its markets during the first half of 2026. The cooperative has also approved a major €300 million investment in a new cheese dairy at its Götene site in Sweden.
The new facility is expected to approximately double the site’s milk intake to around 1 billion kilograms annually, with production scheduled to begin in 2030. Although the Götene project focuses on cheese rather than protein ingredients, it reflects Arla’s broader strategy of investing in modern production capacity to meet long-term dairy demand.
The company’s leadership has indicated that further investment in ingredients is likely as demand continues to expand. The focus is particularly relevant to high-value dairy ingredients, where stronger pricing and demand can provide opportunities beyond traditional commodity dairy markets.
Protein demand contrasts with weaker commodity markets
The growth in protein ingredients is taking place against a more challenging commodity environment. High milk availability in Europe has placed pressure on dairy commodity prices and reduced the value of milk during the first half of the year.
Arla’s performance price declined to 43.6 euro cents per kilogram from 57.5 euro cents per kilogram in the first half of 2025. Despite this pressure, stronger branded volumes, protein demand and operational efficiencies helped protect the company’s overall performance.
This contrast illustrates the growing importance of value-added dairy categories. While commodity markets can be heavily influenced by milk supply and global price cycles, specialised ingredients and protein products can benefit from structural demand trends in nutrition and health.
DMK merger adds scale
Arla also completed its merger with German dairy cooperative DMK on June 1, 2026. The combined cooperative brings together approximately 11,200 farmer owners and 28,800 employees, with a total milk pool of about 20 billion kilograms.
Only one month of DMK operations was included in Arla’s first-half results, meaning the full impact of the merger will become more visible in future financial periods.
With growing protein demand, expanded processing capacity and the larger milk pool created by the merger, Arla is positioning itself to capture opportunities in higher-value dairy categories.
Outlook
Arla has raised its full-year guidance for strategic branded volume-driven revenue growth to between 4% and 6%, compared with its previous guidance of 1% to 3%.
The cooperative expects global dairy markets to remain volatile, particularly because of high milk supply, but sees continuing strength in consumer demand for nutritious dairy and protein products.
For Arla, the current protein boom represents more than a short-term pricing opportunity. Increasing demand for whey, sports nutrition and protein-rich foods is encouraging the cooperative to expand its capacity and place greater emphasis on value-added dairy ingredients as part of its long-term growth strategy.