Arla Foods, one of the world's largest dairy co-ops, is expanding its U.S. presence by partnering with a processor to manufacture its whey protein for the food and beverage industry.
The dairy giant said South Dakota-based Valley Queen will produce ingredients for Arla’s Nutrilac ProteinBoost line. The whey protein concentrate aims to boost protein content in food and beverage products without compromising taste or texture.
“Demand for protein-enriched dairy products continues to grow in the US," Luis Cubel, group vice president and managing director of Arla Foods Ingredients, said in a statement. "In order to meet … our ambitious plans for growth in North America, it was essential for us to significantly increase our capacity."
Production at Valley Queen's plant in Milbank, South Dakota, will begin this winter after the company installs specialty equipment. Valley Queen, which has about 440 employees, handles around three billion pounds of milk annually.
Owned by 8,400 farmers in seven European countries, Arla has significantly expanded its ingredients business by focusing on sports nutrition and protein. The company last year received regulatory approval to buy the whey nutrition business from competitor Volac, a move Cubel said at the time "consolidates our position as a leader in the space."
Arla is pushing deeper into the ingredients space as it expects sales pressure in 2025 from rising milk prices that could dampen consumer demand. The co-op reported a strong financial performance in 2024, with revenue in its ingredients segment rising 5.4% due to demand for whey-based ingredients.
Soaring demand for whey protein has limited supply and pushed prices to record highs in the U.S., according to StoneX. North America made up 38% of the revenue share for whey protein in 2023, according to Precedence Research, with the global market estimated to grow to $10.7 billion this year.
Arla has expanded in the U.S. over the past three decades through a series of partnerships and acquisitions. Arla bought Wisconsin-based dairy White Clover in 2006 a few years after inking a licensing deal with the specialty cheese manufacturer. In 2017, the co-op formed a joint venture with Dairy Farmers of America to expand cheddar cheese production in the U.S.
