Danish-Swedish dairy cooperative Arla Foods is investing more than €63 million to expand production of skyr and cottage cheese in Germany and Sweden, responding to rising consumer demand for protein-rich foods.
The investment includes €35 million for skyr production at Upahl, Germany, and €28.3 million for cottage cheese production at Falkenberg, Sweden. The expansion aims to increase production capacity, meet growing demand across markets and create greater value from milk supplied by Arla’s farmer-owners.
The investment reflects a broader shift in consumer preferences towards convenient, protein-rich foods associated with active lifestyles and balanced diets. Products such as skyr and cottage cheese are increasingly becoming part of everyday meals and snacks.
Strong Growth in Skyr and Cottage Cheese
Arla reported that skyr volumes across its European markets have grown by more than 33% over the past three years, while cottage cheese volumes have increased by 25% across its markets during the same period.
Skyr, a traditional Nordic cultured dairy product, has emerged as one of Europe’s fastest-growing dairy categories. To support demand, Arla has invested €51 million in skyr production capacity and efficiency since 2023, with the new €35 million investment adding to those efforts.
Commercial production from the expanded skyr capacity at Upahl is expected to begin in the second half of 2028.
Cottage cheese has also benefited from changing food and nutrition preferences. Arla’s investment in its Falkenberg facility, described as Europe’s largest cottage cheese production site, will increase capacity and modernise operations. The work is expected to be completed gradually through 2028.
Arla has also been expanding its cottage cheese business internationally, including through its acquisition of Australian producer Brancourts earlier in 2026.
Dairy Companies Respond to Protein Demand
Commenting on the investment, Arla Foods CEO Peder Tuborgh said demand is growing for products that combine high protein content with convenience and taste. He said the investments would help the cooperative serve more consumers while supporting customers and creating long-term value from farmer-owned milk.
The developments underline how dairy companies are adapting their product portfolios and processing capacity to capture growth in protein-focused food categories.
For the wider dairy industry, rising demand for skyr, cottage cheese and other protein-rich products could create opportunities to improve milk utilisation, expand value-added manufacturing and develop products for changing consumer needs. However, businesses will need to align capacity expansion with sustained market demand and efficient production.
Source: Dairynews7x7 13 Oct, 2026 Read full article here
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