Arla Invests More Than €63 Million in Skyr and Cottage Cheese as Protein Demand Accelerates

Arla Foods is investing more than €63 million to expand skyr and cottage cheese capacity in Germany and Sweden as demand for high protein dairy products continues to rise across Europe.

The farmer owned dairy group will invest €35 million at its Upahl site in Germany to increase skyr capacity, with commercial production from the expanded operation expected in the second half of 2028.

A further €28.3 million will go into Arla's Falkenberg dairy in Sweden to modernise and expand cottage cheese production through 2028.

Arla says its skyr volumes across European markets have grown 33 percent over the past three years. Cottage cheese volumes have risen 25 percent over the same period.

Growth has accelerated in several national markets. Arla cited cottage cheese market growth of 13 percent in Sweden, 37 percent in Denmark and the United Kingdom and 38 percent in the Netherlands over the last year.

The latest spending builds on earlier capacity investment. Since 2023 Arla has put about €51 million into skyr production, while investment in Swedish cottage cheese capacity since 2025 totals about €34 million.

The expansion reflects a wider shift in dairy demand toward products marketed around protein, convenience and satiety rather than traditional milk consumption alone.

For Arla's farmer owners, the strategic question is whether sustained high protein demand can support additional milk value through differentiated products. The new capacity signals that the cooperative expects the category to remain a significant growth area through the end of the decade.