Arla to Expand Operations as Cottage Cheese Production Grows in Sweden

04-Dec-2025

Key Takeaways:

Arla Foods allocating SEK 70 million (USD 7.4 million) to expand cottage cheese manufacturing at its Falkenberg dairy.
Planned upgrades aim to lift annual Keso cottage cheese output by 1,500 tons, reaching 27,000 tons this year.
Investment focuses on modernizing filtration, cooling, and efficiency systems, with extra capacity expected late next year.
Falkenberg remains Europe’s largest cottage-cheese site, handling roughly 130 million kg of milk annually.
Sweden continues to attract Arla investments, including earlier commitments to skyr production in Jönköping.

Major Expansion Planned for Arla’s Falkenberg Dairy:

Arla Foods is directing SEK 70 million into its Falkenberg facility on Sweden’s west coast, aiming to substantially increase output of its Keso cottage cheese line. The cooperative expects the site to reach about 27,000 tons over the year, which would push production roughly 17% higher than last year.

The investment centers on upgrading core processing equipment. Filtration and cooling systems are set for replacement or enhancement, and the company is working on raising overall capacity while improving energy and operational efficiency. The dairy currently runs six packaging lines to serve Sweden and export markets including Finland, Denmark, and Spain.

Workforce and Production Capabilities:

Arla confirmed that staffing will stay at around 130 employees. Hiring has already risen markedly over the past two years as demand for cottage cheese climbed, so no additional roles are planned for this phase of improvements.

Falkenberg holds a prominent place in the company’s network, processing about 130 million kilograms of milk from Arla’s farmer members. Along with Keso, the dairy also produces the Cheasy brand and is regarded by the company as the largest cottage-cheese facility of its kind in Europe.

The upgrades are scheduled to begin early next year. Extra capacity should become available toward the final quarter once all equipment is fully installed and running.

Growth Strategy Across Sweden and Denmark:

Sweden continues to be one of Arla’s strongest markets, delivering €1.59bn in revenue last year, a year-on-year increase of 3.6%. Group revenue reached €13.77bn over the same period.

The company has already outlined further investment plans in Sweden. Earlier this year, Arla disclosed a €34.5m commitment to its Jönköping site to launch skyr production. In Denmark, the cooperative is preparing to spend €59.4m to expand cream cheese capacity at its Holstebro dairy.

Arla is also navigating a major corporate step with its proposed merger with Germany’s DMK Group. A decision from competition authorities is expected in the first half of the upcoming year.

About Author:

Kiran Thapa, Food and Beverage Market Analyst

With 3 years of experience in the food and beverage industry, Kiran Thapa specializes in analyzing market trends, supply chain dynamics, and investment opportunities in production facilities. She focuses on sustainability, packaging innovations, and manufacturing technologies that shape the future of food production and distribution, helping businesses capitalize on emerging trends.

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