Arla will start supplying Morrisons in March 2018. It will replace the supermarket’s current supply deal, which sees its milk provided by Arla and Müller.
The retailer’s head of trading for dairy Steve Newbould said: “We believe this agreement will be simpler for our business and will help to develop a sustainable dairy sector.”
An Arla spokesman said the deal was welcome news and demonstrated Morrisons’ continued support for the business.
‘Exciting long-term relationship’
“We look forward to an exciting long-term relationship with Morrisons collaborating further on a number of initiatives that will further champion British dairy,” the spokesman added.
Chairman on the Arla/Morrisons farmer group Arthur Fearnall said Arla’s farmer-owned principles played a crucial role in the outcome of the supermarket’s decision.
“I'm looking forward to representing our owners in what I believe will be a significant partnership going forward,” he added.
Morrisons said the deal was part of its commitment to expanding its regional and local milk offering in its stores.
Commenting on the deal, a spokesman for Müller said: “Morrisons remains an important and valued customer for our business and we continue to provide a range of Müller branded dairy products – including Frijj flavoured milk and our range of yogurts and chilled desserts – to support their dairy category offering to consumers.”
‘Morrisons remains an important and valued customer’
Farmer-owned Arla Foods added-value milk sales grew to £95M last year. A total of 1.5M consumers chose its branded products over standard fresh milk, the company claimed.
The company supplies own-label milk to a number of supermarkets, including Asda Vitamin D Milk and Morrisons Milk for Farmers.
In January, Arla announced it was to invest £37.5M in its UK sites and logistics operations this year. This included a £5M boost to its Taw Valley creamery in Devon and £5M to its Stourton dairy in Leeds.
Meanwhile, Morrisons reported a 3.4% rise in like-for-like sales in its first quarter trading update, with chief executive David Potts thanking the dedication of the supermarket’s team of food makers and shopkeepers.