Danish dairy giant Arla makes big gains in Chinese market

COPENHAGEN -- The value of Denmark's dairy giant Arla's stock in China's largest dairy, Mengniu, has risen 65 percent, making Arla's investment of 1.8 billion Danish kroner (around $333.3 million) now worth nearly 3 billion kroner.

"We are very pleased," said Fred Juulsen, head of Arla's operations in China, cited by the Danish news paper Jyllands-Posten on Thursday.

China's demand for milk products is soaring due to continued growth of the Chinese middle class, but Mengniu's success has still taken experts by surprise. The company's turnover has increased by 20 percent, while earnings have improved by 27 percent.

Mengniu had been involved in food scandals that affected the company's bottom line before Arla became a key shareholder of Mengniu in 2012. Juulsen said Arla is working to rebuild credibility with consumers by instituting safety measures.

Experts say experience from other Asian countries has shown that the consumption of animal foods like dairy and meat increases with purchasing power. In China, the consumption of dairy products has increased by about 10 percent annually.

Juulsen expects that Arla's sales in China will grow by 50 percent this year.

Arla sells a variety of milk products in China and is looking to add cheese and butter to what it now supplies Chinese consumers.

Last month, Brand Finance, one of the world's leading branding companies, placed three Danish brands, namely Maersk, Arla and Danske Bank among the top 500 brands in the world, with Arla ranking at number 444.

Fonterra challenged in China's milk powder market

Dairy product imports 'to witness sharp rise'?