Arla to move some production to newly acquired Bahrain facility

Arla Foods has announced plans to move parts of the production from three of its sites to a newly acquired facility in Bahrain.

The announcement comes after the Denmark-headquartered company last week completed the acquisition of Mondelēz’s processed cheese business in the Middle East region.

Following the acquisition, Arla said it is looking to move certain processed cheese and sterilised cream production lines from its Bislev and Akafa sites in Denmark and from its Riyadh site in Saudi Arabia to the newly acquired plant in Manama, Bahrain.

Arla said there are still a number of factors that can change the final numbers, however it estimated that the following volumes will be moved: approximately 26,000 tons (annually) of processed cheese from Bislev, potentially impacting 40 jobs; and around 18,000 tons (annually) of sterilised cream from Akafa, potentially impacting 35 jobs. The volume of processed cheese to be moved from Riyadh is still to be confirmed.

The moves are not expected to take place until late 2020 and mid-2021, but Arla said it is announcing the change in advance time to ensure a smooth transition as well as timely solutions for affected staff.

“It makes a lot of sense for us to place the production of these exact products at the newly acquired site in Bahrain since these products are primarily made for the Middle East and North Africa and in lesser degree for other markets,” said Sami Naffakh, head of supply chain in Arla.

“It gives us a strong regional supply chain footprint that enables us to secure long-term competitiveness in the region through scale and efficiency, and the pilot plant at our new Bahrain site will allow us to innovate in new ways within this category.”

He added: “It is important for us to be as open about the future as we can be with our employees, and since the coming months will require a high degree of involvement of staff at each affected site we have decided to inform our employees now about the decision to move parts of our production to the new site in Bahrain.”

The acquisition of the cheese production site in Bahrain provides Arla with the opportunity to further expand the company’s branded cheese production in the Middle East and North Africa (MENA) region and to further improve overall efficiency in its supply chain.

Since 2010, Arla has more than doubled its sales organically across the MENA region, which is the company’s largest market outside Europe, through strong positions in cheese under the Puck brand, butter and spreads under the Lurpak brand as well as milk powder and UHT milk under the Dano and Arla brands.

In 2018, Arla’s retail and foodservice revenue in the MENA region reached €560 million.