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Market & Trends

Integrated Annual Report 2019

Our DMK
Sustainability & Responsibility

We live in turbulent times.

Our daily routine is changing with extreme rapidity, and with it our eating culture. More and more often, purchasing decisions are decided not only by the taste of a product, but also by the factors of natural ingredients, resource consumption, animal welfare and environmentally friendly packaging concepts. Individualisation also plays a major role for many people. The flexitarian diet, with its associated reduction in meat consumption, has long since become more than a niche phenomenon. More and more people are also turning to plant- or protein-based alternatives for healthy and sustainable nutrition.

The entire food industry has to face up to these major challenges. With our DMK 2030 Mission Statement, we are already gearing up to address the social megatrends.

 

We made further progress in this area last year – for example, with the successful introduction of MILRAM Kalder Kaffee. But that is not all. We are considering all the company’s brands closely and working tirelessly to offer our customers products that match their dietary habits and satisfy their high standards.

 

Healthy enjoyment thanks to reduced sugar.

Minimalism is not just a popular home décor lifestyle. Less is often more with food as well – particularly when it comes to the sugar content. We have therefore started to permanently reduce the sugar in the foods we produce.

Sugar reduction by numbers

The biggest challenge in reducing sugar is of course the flavour. Many of our customers buy our products because they like the taste. We are therefore doing all we can to keep it that way in future.

We can address this in two ways: by a step-by-step reduction in the sugar content, so that consumers get used to the new taste. Or by using alternative ingredients, which taste equally good and are healthier at the same time (naturally, excluding sweeteners and sweetener-based flavours). For example, natural sweetness can be obtained by using lactose-free milk. The disaccharide lactose contained in milk is split by the addition of lactase, an enzyme produced naturally in the body. Ultimately, a monosaccharide remains in the milk which tastes significantly sweeter, making further additives superfluous.

We launched the innovation initiative “Sugar reduction and alternatives” in 2019 to give this topic a boost within the company. The initiative takes care to see that the sugar content in the existing DMK product portfolio is reduced. It also ensures that new products are developed free from sugar or sweeteners, or with a low sugar content. Kalder Kaffee from MILRAM is the best example. Because of the lactose-free milk, the new wake-up drink does not need to be sweetened. However, the MILRAM buttermilk drink “Sorte des Jahres”, the new varieties of Feine Quarkcreme and our Friesen-Drink are also being produced with less sugar. The result: a saving of around 135 tonnes of sugar in our existing products in the year 2019 alone.

The third and final stage is about finding natural alternatives to sugar. This involves research into innovative technologies, but also the development of a roadmap for the coming years which indicates medium- and long-term solutions.

New packaging for more sustainability

We are all aware by now that plastic waste is a major environmental problem. The avoidance of packaging waste is therefore more than just an economic decision. It is in line with our own aspiration to act sustainably and responsibly.

The key is now to develop innovative packaging that still guarantees food protection while also being more environmentally compatible. Our specialists from the Research & Development department engage in this important task.”

Packaging waste by numbers

Our expert team works constantly to reduce the share of plastic in DMK’s product packaging. The most successful way to do this is to use new packaging concepts that require less material to begin with, but also to discontinue the use of heavy or non-recyclable composites. For example, a special packaging system was implemented in cheese production in 2019 which is made of mono-APET and PET/PE films. These are significantly more environmentally friendly than other materials and can be recycled much more efficiently

In addition, the team is tackling the reusability of big bags which can be re-used after cleaning in the area of the BU Industry. DMK makes a high-profile contribution to reducing packaging waste by these activities.

“Whether in the home or in companies: We have to change our thinking in every area.”

Dörte Krumrey, Corporate Environmental Protection Coordinator with DMK.

Advancing into the plant-based and protein segment.

As part of the new awareness of healthy diet, more and more consumers are also looking for plant-based alternatives to classic dairy products. This market has been growing steadily for years and recorded sales of around 235 million euros even in 2018. Protein products have also made the leap out of a niche market. On the one hand, demand in the young, sporty target group continued to rise, on the other, demand from the more mature generation also increased in the past year and therefore also represents an important growth market for DMK.

As Germany’s largest dairy cooperative, our core business has always revolved around high-quality dairy products, and this focus will continue. It will always remain the heart of our company. However, many consumers are now also looking for alternatives for a variety of reasons: They want quality, the chance to try something new, convenience – and they want it in the most environmentally compatible form possible. Some would also like vegan products. We have to address this change. We want to offer our customers a genuine alternative in the form of plant-based and protein-based foods. This is the only way that we can actively help to shape the future of the dairy industry as an innovative source of inspiration.

In 2019, we therefore took the required steps towards pursuing research and development in these market segments. We want to expand our portfolio with plant-based and protein-based products in order to further improve our business performance. And in doing so, we can draw on expertise that we already use successfully for our BU Industry customers.

 

“We are getting bigger, louder – and more innovative. To do that, we are expanding our product range and will look in future at whether and how we can offer plant-based alternatives to dairy products and a generation-spanning portfolio, for example."

Matthias Rensch, COO of the Business Unit Brand

“Our goal is to position ourselves as a market-oriented solution provider. For this purpose, we will push forward with the development of innovative protein products and establish a leading role in the market for ourselves. We already produce plant-based proteins which are important ingredients for the manufacturing industry.”

Alexander Godow, COO of the Business Unit Industry

Consumers want more convenience.

In addition to health-conscious nutrition and packaging waste avoidance, the topic of convenience also took on added importance last year. The reasons are manifold. Society is changing, and because of increasing product choice the desire for more individualisation has arisen. “New Work” is also contributing to the change in eating culture. Instead of having regular mealtimes, people now eat as and when it suits them best.

In this new world, consumers are eager for brands that support them in their increasingly complex everyday lives and make them feel that they complement their often very individual lifestyle effectively.

At DMK, we want to satisfy this aspiration by enthusing our customers with new product solutions that suit their lives and offer them a true value added – for example with our new, wake-up drink MILRAM Kalder Kaffee.

“Our goal is to be at the consumers’ side in every phase of their lives. Our future focus will be on tailoring our product portfolio to their needs (...) in every phase of life – from baby food to nutritious fare for senior citizens.”

Ingo Müller, CEO of the DMK Group

We do not feel that the convenience trend conflicts with our sustainability goals. Rather, we see it as our task to integrate the two topics. In new product development, we therefore always think holistically and try to reduce the amount of packaging materials to the absolute minimum and optimise their recyclability. This is the only way we can guarantee our customers guilt-free enjoyment.

The feel-good factor is crucial.

To convey this attitude to the outside world, we not only need to improve the product portfolio but also to change our communication. We have therefore used emotional storytelling more and more since 2019. By giving our brands their own identity and story, we illustrate our understanding of consumers’ needs and at the same time emphasise our products’ relevance.

Our successes in 2019 have demonstrated clearly that we are doing well with these tactics. Our MILRAM brand in particular has developed positively. More details of how we achieved this are given below. In general, however, it can be said that we have attracted new target groups and secured important market share with our new strategy.

“We are growing faster than the market in virtually all product categories.”

Matthias Rensch, COO of the Business Unit Brand

MILRAM – relaxed attitude, north Germany style.

How does storytelling work for a famous brand like MILRAM? All we had to do was reflect on our origins.

Our winning MILRAM brand has always been at home in the north. You could say it is “Nordic by nature”. With this brand core, we revised and extended MILRAM’s image and the associated product portfolio.

“We focused mainly on one point in 2019. Our home of freshness, roughly sketched out as a region that is not only the home of a special quality of fresh dairy products, but also the origin of a typically north German casualness. A relaxed attitude which gives our MILRAM brand and its innovations even more relevance.”

Matthias Rensch, COO of the Business Unit Brand

MILRAM therefore stands for north German calm and relaxation – with fresh and delicious products such as the popular MILRAM FrühlingsQuark curd, which fit perfectly into our consumers’ everyday life. The result: relaxed enjoyment in every situation.

MILRAM products now also have the north German character in their name. Many of the cheeses, such as Müritzer, Rügener and Sylter, point to their north German home, but MILRAM Moin Kakao and MILRAM Friesen-Drinks also radiate a touch of north coast flair.

 

Kalder Kaffee takes the Hurricane Festival by storm.

With around 70,000 visitors, the Hurricane Festival is the biggest music event in northern Germany and especially popular with young people. We were there live with MILRAM in 2019. In line with the new focus, the brand was presented on site with north German flair and a genuine product innovation: MILRAM Kalder Kaffee.

This wake-up beverage rapidly attracted enthusiastic fans – particularly in the morning after dancing the night away. The mix of cold-brew coffee and lactose-free milk impressed the party animals and took their hearts by storm.

 

With MILRAM Kalder Kaffee, we reinvented iced coffee. With no added sugar, no substitutes, no frills. Instead, we delivered a delicious convenience product with genuine value added, totally relaxed and naturally north German. The product not only proves the DMK Group's innovativeness, but also makes a young target group enthusiastic about us. And that, in turn, is good for our company's future success.

A successful year for ice cream.

But MILRAM was not our only consumer hit. Our ice cream division was also on a winning streak in 2019. The new, practical 500ml tubs of the MILRAM ice cream varieties turned out to be a real growth driver. In addition, MILRAM Skyr ice cream was a particular favourite, with a lot of protein but all the less fat, less sugar and fewer calories. It is more popular with consumers than ever.

Our cooperations made the biggest contribution to the Business Unit Ice Cream’s overall success. We got Bahlsen on side for a strategic partnership in the spring. We went into the ice cream cabinets together with two Bahlsen classics: “Ohne Gleichen” and “Messino”. On top of these, we scored our biggest hit with the reinterpretation of “Zimtstern” ice cream.

We also moved into the third-largest market segment - wafer cones - with new ice cream creations for the Baileys brand. The high-quality ice cream made from the popular cream liqueur was very well received by consumers. However, there was also a huge demand for ice cream lolly varieties. Yet more proof that here, too, DMK’s realignment is really paying off. We want to pursue this development further in 2020 and systematically gain new cooperation partners.

“We got off to a promising start with our new creations, achieving six-figure sales of the individual packs of our new Bahlsen products in just three months.”

Marcus-Dominic Hauck, COO of DMK Ice Cream

All-new Uniekaas.

2019 was a year of change for Uniekaas, our Dutch subsidiary DOC Kaas’s heritage brand. In addition to a brand-new logo, the website, product range, recipes and ingredients were overhauled - even the delivery vehicles were redesigned. We are now offering its cheese products to an enthusiastic public, not only in Holland but beyond, with the slogan: “Unser leckerer Uniekaas” (“Our scrumptious Uniekaas”).

 

Uniekaas also showed off its new look at Anuga 2019 in Cologne. The managers talked at the trade show about their plans to revitalise the brand, and presented product innovations such as “Stroopwafel” and “Drop Cheese”. Both creations combine classic Gouda cheese with new, exciting ingredients such as waffles or liquorice. With this strategy, the brand demonstrates a genuine appetite for bold innovation and proves itself a perfect fit with our 2030 Mission Statement.

Action in the baby market

The DMK Group significantly strengthened its baby food business unit by taking over the Alete and Milasan brands in the spring of 2019. In combination with Humana and Sunval, these names place us in a good position with retailers. We now want to take the next step and implement the brands within our 2030 Vision Statement.

Alete in particular will stand for health-conscious children's nutrition going forward. The organic quality and sugar content of all 70 Alete products are currently being optimised so that the brand makes a good fit with the DMK Group’s overall strategy.