Milk giant behind Lurpak and Anchor increases prices for supermarkets

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The UK's largest dairy company, Arla Foods, has increased the prices of its products for supermarkets.

The co-operative, which is behind brands such as Lurpak, Anchor and Cravendale, has been forced to hike prices due to the milk price rises in the last four months of 2016.

Read more: Manufacturing giant Premier Foods considers price rises due to Brexit vote

Speaking to City PM, Arla Foods UK managing director Tomas Pietrangeli said:

In general we don't do price increases based on currency movements, but it's fair to say there is an upward movement on dairy price, so we have been putting up prices, driven by swings in milk prices.

The UK is Arla's biggest market, accounting for 25 per cent of its group revenue. The co-operative is headquartered in Denmark and represents 12,000 farmers across the UK, Denmark, Sweden, Finland, Germany, Belgium and Luxembourg.

In its full-year results, released today, Arla said group revenue fell by 6.8 per cent to €9.57bn (£8.10bn), down from €10.26bn the year before. The Lurpak maker's net profit grew 20.7 per cent, however, to €356m.

In the UK, revenue fell from €2.5bn to €2.2bn. Pietrangeli said this was because milk prices had been dropping for the majority of last year, and only picked up towards the end of 2016. The company was also hit by the devaluation of the pound following the EU referendum.

Several food suppliers have been increasing prices due to currency movements. Last year, Unilever become embroiled in tough negotiations with Tesco over price, and it later emerged that Premier Foods was increasing prices for its brands, including Mr Kipling cakes and Ambrosia milk.