Lactimilk exerts its independence from Puleva

With Ebro Puleva's attention focused on other businesses in recent times - not least its rice arm, Herba, which has grown rapidly this year after four acquisitions - the milk arm has been somewhat ignored - with the result that market share has been lost.

But this lack of investment is about to be addressed. According to reports in the Spanish press, the Lactimilk production site in Arteixo, Galicia, will get now more than €20 million to expand production of the brands, with some €15 million of this set aside for improving operating procedures and a further €7.5 million ringfenced for advertising and marketing.

Since Lactimilk was bought by Ebro Puleva in 1999, it has been largely overlooked by the company, which has in fact been reducing the number of dairy production facilities it owns in a bid to reduce costs.

But a report in the La Voz de Galicia​ newspaper suggests that the decision to finally invest in the business reflects the recognition by Ebro Puleva that its previous policy (of focusing solely on the Puleva brand of milk) was not the right one and that the Lactimilk business does indeed have significant potential.

But Lactimilk is getting more than just a cash injection from its parent company. The unit has its own management, including marketing and financial directors, and has been given a degree of independence which other Ebro Puleva businesses would envy, according to the report.

This in turn will give the Leyma, Ram and El Castillo brands a much greater opportunity to exert their individuality, and to succeed in markets where the Puleva brand has not. Puleva has a strong following in the south of Spain, while the Lactimilk brands are far better known in the north, for example.

But Lactimilk must also ensure that its product offering is also distinct from that of Puleva by focusing on certain products for each of the three brands. For example, for the Leyma brand, it will be the pasteurised milk product which will be given the greatest support. The brand has a loyal following, but has not been marketed for five years, the company said, which means it has not lived up to its significant potential.

According to the report, Leyma and Ram have lost two thirds of their market share since they were bought by Ebro Puelva. The paper cited the company as saying that the company had seen the amount of milk processed each year fall from 300 million litres in 1999 to just 125 million litres this year, just in Galicia itself. At the same time, Ebro Puleva has taken 400 million litres of the Galician milk quota to supply the needs of the Puleva brand.