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.

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.