Arla Foods is looking to support the growth of its Starbucks and Cocio milk drinks with a round of capital investment in Denmark.

The dairy major is spending DKr20m ($2.9m) on projects at its factory in the city of Esbjerg “to accommodate growth” for the brands in Europe, the Middle East and Africa (EMEA), a spokesperson said.

Arla will put the money towards “a mix of new buildings, processing equipment and maintenance”, the spokesperson added.

The Danish co-op has held a licence to manufacture and distribute Starbucks RTD coffee products in the EMEA region since 2010. In 2018, the companies signed a new, 21-year deal for the licence.

After buying a 50% share of Cocio Chokolademælk in 2002, Arla acquired the business outright six years later.

According to Arla’s 2023 annual report, the co-op saw its sales volumes of Starbucks RTDs jump 15.7% last year. Revenue rose 13.7%. The company did not disclose more detailed figures on volume nor on revenue.

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Arla said the growth was “mainly driven by our European business”. It sells the RTDs in more than 50 markets across EMEA.

A separate report for the Cocio Chokolademælk subsidiary shows the unit generated revenue of DKr645.9m in 2023, up 19.5% on a year earlier. Arla does not publish volume figures for the business.

Denmark remains the largest market for the Cocio brand. However, the Arla spokesperson added: “In 2023, we found a niche market in China where products sold really well and China actually went from nothing to the second-biggest market for Cocio in 2023.”

In May, Arla set out plans to invest further capex in its UK manufacturing sites this year. The co-op lined up projects at its dairies and creameries at Lockerbie, Stourton, Aylesbury and Westbury.

However, earlier this week, the group said it would shut a cheese-making site in the UK after it failed to find a suitable buyer for the facility.

Arla plans to close down the Melton Mowbray creamery, known locally as Tuxford and Tebbutt.