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ARLA FOODS CASE

GETTING CONSUMERS MORE INVOLVED IN THEIR DAIRY PRODUCT PURCHASES

HOW TO IGNITE CONSUMERS’ PASSION FOR DAIRY?

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ot unlike most other industries, the dairy industry has suffered during the economic downturn with an increasing number of consumers choosing products according to price rather than quality or brand. Budget products fill up supermarket shelves, offering a low-cost alternative to the starved consumer. Not surprisingly, the crisis has also affected the global dairy company Arla Foods which has seen a clear change in consumer behaviour. Studies show that 40 per cent of all Danish consumers don’t have a preference for a particular dairy brand. They buy whatever is on the shelves, with price rather than quality and taste driving their purchasing decision. Not to mention the fact that dairy suppliers seem to have been lulled into a false sense of security, having neglected for some time to develop tasty premium products of higher quality. “Many consumers have stopped making engaged decisions when they shop for groceries – they choose the cheapest alternative which eventually will devaluate the quality of dairy products. Similarly, the dairy industry has not assumed responsibility for driving and exploiting the opportunities of developing products that appeal to those looking for quality and taste. At Arla Foods, we cannot just stand by and watch this happen. That’s why we’ve launched a new strategy with the purpose of


PASSION-FOR-DAIRY INITIATIVES Unika gourmet cheeses

Arla Foods flagship store

Vending machines with dairy products

A selection of eight unique gourmet cheeses

In April 2012, Arla opened a small flagship

The first vending machine is already installed

based on traditional cheese-making tech-

store in Torvehallerne in Copenhagen, making

at the Zoo in Copenhagen and more are

niques, matured for many years and

the exclusive Unika cheese line available for

to follow, especially in schools to ensure a

sold exclusively to restaurants and in

consumers for the first time.

healthier alternative to the kids’ lunch pack.

specialty shops.

reinstating passion for dairy among consumers and employees, driving the development of each category starting from the top and supplying innovative premium products. We need to rebuild a culture of pride and passion for every single dairy product we make. Coffee is a great example that such a change is possible: 20 years ago, the selection was limited to a few brands and the interest was minor; today there are a myriad of choices, and consumers have a clear position regarding their favourite type of coffee roast, aroma, flavour or even which blend they prefer,” Peter Giørtz-Carlsen, CEO of Arla Foods Denmark, explains.

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s one of the largest producers of dairy products in the Nordic countries, Arla Foods’ role is to ensure diversity and innovation within their product categories while leading the way in an international environment with increasingly fierce competition. Arla Foods’ strategy is therefore threefold with a simultaneous ambition to drive high-end innovation and quality, to develop new exciting dairy consumption occasions in the mainstream segment and to continuously remain cost-competitive compared to international competition.

Our obligations are many at Arla Foods. We need to be able to offer a cost sensitive alternative through efficient mass production and at the same time develop interesting premium products for the more conscientious consumers. But more importantly, we need to ensure that we don’t end up with a market for dairy, as seen in many other countries, with a rather limited product offering within each category, primarily dominated by budget products. We need to ignite passion, beginning with the premium segments, which will eventually create a ripple effect throughout all products and price segments, ensuring choice, quality and value for all,” Peter underlines. Another interesting trend involving consumer behaviour and preferences for more premium products is the increasing interest in the Nordic kitchen that combines a greater focus on gourmet quality with the use of local everyday products. This is clearly an open

invitation for dairy producers such as Arla Foods to be at the forefront of innovation, diversity and category development. Arla Foods will begin the transformation from within. “Before we can expect passion for dairy among consumers, we must ‘live’ the passion among ourselves. To make this happen, we’ve involved all employees in the strategy and implementation process. We all need to take ownership, and the management team must work on breaking down barriers that hinder passion in flourishing,” Peter explains.

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s part of the process, Arla Foods is working on streamlining their product portfolio as well as on developing new products and using new channels to expand the market, thus creating new consumption occasions. An example of this is the installation of 800 coolers and vending machines in Danish schools and other similar places to offer a healthy ”on-the-go” alternative. Offering dairy products in vending machines is quite unusual in Denmark; it may, however, create new dairy consumption occasions in the future.

A rla Foods will begin the transformation from

within. “Before we can

expect passion for dairy among consumers, we must ‘live’ the passion among ourselves”.

Peter Giørtz-Carlsen, CEO of Arla Foods Denmark


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