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Dairy Industry

Live from the DMK video studio

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16.12.2020
This time, the 2020 Representatives Assembly was completely virtual. Here are the key messages:

Cameras, spotlights and a room full of broadcasting technology – this year, the DMK Representatives Assembly was dominated by the coronavirus. Rather than holding a large event with hundreds of participants, DMK held a virtual meeting, using a professional video studio in Bremen so representatives could follow the speakers’ presentations on their PCs, laptops or smartphones. CEO Ingo Müller was keen to provide as much transparency and continuity as was technically possible, despite the difficulties during this year of crisis. “So far, we have steered our way through the pandemic not by being reactive but by being proactive,” he says. Besides introducing digital technology, DMK was quick to react in other areas too. Supplies to supermarkets were swiftly ramped up by 30 percent at the start of the lockdown in order to meet the surge in demand. “DMK proved to retail customers that it is a reliable supplier at the time when people were panic-buying, creating sudden bottlenecks.”

Baby needs to develop

Besides discussing the crisis unleashed by the pandemic, the speakers also reviewed the 2019 financial year, including several major challenges for the DMK Group: The Strückhausen plant, with capacity for more than 20,000 tons of baby food, started operations. Further further strategic activities in that Unit included the acquisition of the Alete and Milasan brands. The Alete brand has just been refreshed and Milasan’s milk powder is set to appear next. Abroad, too, in markets such as Italy, the baby products business is delivering strong results. However, the focus on growth was more challenging than expected for the team. The division did not post a profit last financial year – also due to high investments – and is not expected to do so in 2020. “Baby food is a real growth market, but we aren’t on the ball there as much as we could and should be,” said DMK CFO Dr. Frank Claassen. Ingo Müller also said this was not acceptable, given the positive development of sales and profit on the market overall. In order to change, project teams are working on making logistics and production more efficient, strategic partnerships with third-party suppliers, higher capacity utilization of the plant and using the Alete brand. Employees are also to be integrated more closely into processes.

Investments will pay off

In all of its activities and challenges, DMK is profiting from a growing sense of unity. “Our colleagues are living solidarity and team spirit, even if much of that is being communicated virtually right now,” said Müller. Frank Claassen also emphasized how well DMK has come through the crisis so far. “We have become more efficient internally, cutting costs and putting the brakes on investments.” The company has been optimized in many areas, from the spray tower starting operations in Beesten to the sale of the Ice Cream Business Unit’s plant in Haaren to the Schwarz Group. And DVN, previously a DMK Group joint venture, has now been successfully transferred to wheyco’s whey business in the Netherlands and is profiting from a growth market. That is not all: Two locations have been rebuilt to fulfill the growing demand for mozzarella products, together with ARLA and RFC. In Russia, the DMK Group has built a new cheese factory. The Rügen site has been shut down. “All these measures depressed earnings and the milk price in 2019 – we were juggling a lot of balls all at the same time,” said Müller. CFO Dr. Frank Claassen said, “This year, too, it has been a tough journey up until this point and it will continue to be bumpy – but we are doing everything that we can to make our size into an advantage, with greater power and efficiency.” Thanks to the measures completed so far, the company is better placed for 2020. “This year, one of our interim targets is to reach the 11 average,” says Müller, referring to the average milk price of 11 comparable dairies. In 2019, the payout price was 0.8 cents per kilo below that average.

The sector speaks with one voice

Last but not least, the dairy industry is still battling with gloomy headlines, consumer skepticism and growing demands on production. Now, more than ever, it is important for the sector to speak up with a united voice, so DMK has been focusing on industry communication. “What we need in the future is to have a strong voice in our dialogue with consumers, politics and the media,” says Thomas Stürtz, Chairman of the Cooperative Management Board. Industry communication should play a decisive role in helping people recognize milk as a high value product. The aim is to improve its image, and excite young people about dairy products.

Internal dialogue is important too

DMK Group’s dairies supply the populace with a broad range of products. “Dialogue and solidarity are the heart of a cooperative,” Supervisory Board Chairman Heinz Korte said in his concluding statement. For him, the food sector is of systemic importance but it not automatically self-sustaining. The current milk price is not sufficient to finance the investments that are needed on farms, he said.

He ended the meeting by calling for criticism and feedback, saying this is the only way that DMK can continue to develop. Throughout the meeting, attendees were also able to cast their votes, after these were postponed in the summer due to the pandemic.

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