Arla Foods is planning to up the production capacity at a plant making on-the-go, chilled coffee.

The Denmark-based dairy group, which makes and markets drinks for Starbucks, said it is meeting “increased global demand”.

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Work at the factory, based in the Danish town of Esbjerg, is expected to be finalised by the end of next year.

“The expansion will increase our capacity by around 20%. We are investing EUR41m (US$43.1m) in the dairy to expand production, packaging lines and cooling areas as the demand has outgrown the dairy’s capacity,” an Arla spokesperson said. Just Drinks has asked Arla to more precisely quantify the rise in capacity.

The spokesperson, without providing further details, said “the ready-to-drink coffee beverage category has grown with an average of 20% every year and with a record growth of almost 34% in 2021”.

Arla struck a production and distribution deal with Starbucks, covering Europe, in 2010. The contract was extended for 21 years in 2018, taking in the wider EMEA region.

When Arla announced its 2021 financial results in February, the co-operative said its Starbucks-branded sales rose almost 34% in volume terms. A year earlier, sales volumes increased 27.3%.

Arla, which owns brands including Castello cheese and Lurpak butter, generated group revenue of EUR11.2bn in 2021, up 5.6% on a year earlier.