2020 marks 10 years since European farmer-owned dairy cooperative Arla Foods and the American coffee company Starbucks partnered up to combine chilled coffee and milk for the ready to drink (RTD) market. The partnership has been a success from the start, securing continuous growth in a high pace global market, in which unit production has increased by no less than 1700 per cent.
When Arla Foods and Starbucks joined forces in 2010, they started out in three markets. Today the products are sold in more than 43 countries across Europe, The Middle East and Africa (EMEA) and plans are in place to launch in new markets. Coupled with this huge geographic expansion, unit production has increased by 1700 percent from 8 million units in 2010 to close to 144 million in 2019 sold in supermarkets and convenience stores around the world.
Says Hanne Søndergaard, Chief Marketing Officer (CMO) at Arla Foods: “We have been fortunate to have a great team from both companies working together and we are delighted that our relationship continues to grow. From the beginning the partnership combined Arla’s extensive experience in manufacturing dairy beverages and our widespread supply chain setup with Starbucks unique coffee expertise – it’s a perfect match if you look at the success rate of our shared growth.”
The global RTD coffee market is one of the fastest growing in the RTD category, with sales up by 17 per cent in 2019. Since Starbucks chose Arla Foods as its license partner in 2010 the business has seen double digit growth each year, which is expected to continue over the next three years. In 2018 it became the leading RTD brand in EMEA, a position it maintains.
Added Søndergaard: “The ready to go coffee category continues to grow very quickly and that means great potential for us. We reached an important milestone when we became the leading provider of milk-based beverages in Europe, the Middle East and Africa. This has shown us that consumers welcome the great taste and premium nature of the beverages and we want to build on that success.”
In 2018 the companies signed a 21 year strategic licensing agreement, giving Arla Foods license to continue to manufacture, distribute and market Starbucks premium milk-based RTD coffee beverages for the EMEA region. It is against this background of success that the RTD category will play an even bigger role in Arla Foods future strategy.
Concluded Søndergaard: “Looking ahead we believe that innovation is the key to future success. We are committed to continuing to work closely with Starbucks to ensure that chilled coffee with milk stays a consumer favorite while we develop and grow the category in a sustainable way.”
The Starbucks chilled coffee range is produced at Arla Foods’ site in Esbjerg in Denmark with milk from Arla Foods’ 9700 farmer owners and 100% arabica, ethically sourced coffee from Starbucks Coffee Company.
