Arla Foods Annual Report 2020
RESPONSE
TREND
Management Review Our Strategy Our Brands and Commercial Segments Our Responsibility Our Governance
Our Performance Review
Our Consolidated Financial Statements
Our Consolidated Environmental, Social and Governance Data
EMBRACING CHANGE: MAJOR TRENDS
AND STRATEGIC RESPONSES
COVID-19
UNCERTAINTY IN GLOBAL ECONOMIES
AND LOURING RECESSION
The pandemic has different impacts across markets, resulting in
recession to a varying degree. IMF estimated growth in world GDP
of -3.5 per cent in 2020, where especially the Euro zone posted
high negative growth of -7.2 per cent and Emerging Markets and
Developing Countries -2.4 per cent 1. Most markets are expected
to have recovered by 2022, but there is high uncertainty on the
level of economic activity into 2021 and beyond 2.
CHANGED CUSTOMER AND
CONSUMER BEHAVIOUR
In 2020, consumer food shopping behaviour changed rapidly
due to the disruption of Covid-19, impacting both retail and the
foodservice business. Increased in-home consumption and an
accelerated shift towards e-commerce were the consequences
of several lockdown periods. 2021 is starting with continued
lockdowns and high infection numbers across the world, and
these trends are likely to continue far into the year. However,
out-of-home eating is expected to rise again as the pandemic
is slowly overcome, and we enter into a 'new normal'.
POLITICAL UNCERTAINTY
As a consequence of Covid-19, some countries may impose
certain trade restrictions as focus on supporting domestic
businesses is likely to be increasing. Despite the post-Brexit Free
Trade Agreement between the UK and the EU, friction costs
and potential delays at borders will affect trade with the UK.
Ongoing trade wars between China and the USA and conflicts
in the Middle East will also continuously cause uncertainty in
the global markets into 2021, while a new presidency in the
US may open up for new opportunities.
Given our strong product portfolio and broad
international footprint, Arla is prepared to face the
louring recession in close collaboration with our
customers. This was demonstrated in 2020, when
we managed to shift product volumes from our
foodservice business into retail to meet the unprece-
dented high demand and quickly adapt to the new
market conditions. This agility and resilience of our
business is our strength in uncertain times.
During 2020, our strong commercial execution and
empowered front line proved that we were able to adapt
fast to new customer and consumer demand and
growing our e-commerce business. We kept a steady
supply of products during lockdowns, and we managed
to accelerate digital marketing and e-commerce at an
overproportionate speed meeting our customers where
they were. In 2020, Arla engaged with consumers more
than 600 million times through our digital platforms.
Given our broad global market footprint and a proven
resilient and agile business model, Arla is in a
strengthened position to address the impacts of
political uncertainty across our markets. We strongly
believe in and advocate for free trade, however, we
have prepared our business for different outcomes of
the Brexit negotiations since the Brexit vote in 2016
(read more on p. 20).
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1) Source: IMF Outlook Report (June 2020)
2) World Economic Outlook, October 2020View entire presentation