Dairy company Campina said it will increase investments into products geared towards the growing health and wellbeing trend on the back of significant success of its low fat products in 2007.
Its financial results released today showed a total turnover growth of 11 per cent in 2007, with profit rising to €4bn. The Dutch company attributed this increase to the strong performance of its healthy and low-fat products as well as its strategy to put up its milk prices on the back of the rise in the cost of commodities.
The performance price improved from the previous year, up by 13.5 per cent to €36.93, or by €4.4 for every 100 kg of milk supplied.
Products such as weight control drinks and fat free cheeses performed particularly well.
"In the wake of this success, we'll be making substantial investments in health and wellness concepts over the coming years, with a view to ensuring that they will make and even greater contribution to Campina's turnover," said CEO Kees Gielen.
Demand for healthy products
Campina's low-fat products performed particularly well in 2007 as a result of the continuing health and wellbeing trend, accounting for a large part of the overall turnover and leading it to decide to increase its focus on this area in the future.
According to the World Health Organisation's (WHO) latest projections, approximately 1.6bn adults were overweight and 400m obese in 2005.
With further predicts that by 2015 approximately 2.3bn adults will be overweight and more than 700m will be obese, food manufacturers have been reporting success on seizing the potential for better-for-you products.
Campina said it won over millions of new European consumers with its fat-free drinks and desserts, low fat cheeses, a dairy drink to help weight control and a dairy-based meat replacement product. Sales of its weight control drink grew by 56 per cent, for example, and by 21 per cent for its low fat cheese.
The demand for such products is strong. A Datamonitor's survey, released earlier this year, found that 65 per cent of Europeans and Americans made active attempts to eat healthier in 2005-2006.
To reinforce its health mission, Campina concluded a joint venture with Thai Advanced Food, resulting in the creation of Betagen Holding. The partnership markets a yoghurt drink that has a positive effect on digestion.
At the end of 2007, Campina acquired the ingredients subsidiary Satro Gmbh, which produces ingredients for use in products such as dairy, instant drinks and instant desserts. Campina said the business move was important for a number of regional market positions and new sales channels.
Gielen said: "For the first time in our history we were confronted with prices for basic dairy products that rose to record highs in a very short space of time. However we responded decisively and took steps to reflect these increases in our prices."
The average price paid for milk within the 25 EU member states, excluding Romania and Bulgaria was up by 12.9 per cent last year to a price of 2.42 pence per litre (PPL) compared to the same period during 2006, according to DG Agri.
Campina said the reason for these increase was poor weather and the rising global demand for basic dairy products.
It said at first it could not benefit from the price increases because it trades in bulk products but instead converts the milk into added-value products for buyers and consumers.
However, during the second half of 2007, it increased its prices for many products in numerous markets, thereby reflecting the sharp rise in production costs throughout the dairy chain.
As commodity prices are now falling, Campina sees particular success in its strategy because of its broad product range where the focus is on products and ingredients with an added value.
Gielen said that the price increases were difficult at fist because of Campina's policy to establish long-term relationships with its clients and buyers.
"We therefore took steps in the second half of 2007 to reconcile this policy with the need to implement vital price increases, since costs had shot up throughout the entire dairy chain from production to transport," he added.