Dessert focus for dairy group
merger plans with Denmark's Arla Foods, has announced it is to
focus investment across its milk, yoghurt and dairy-based dessert
divisions in 2005, a move set to allow it to penetrate the growing
trend for branded dairy products in the Far East, as well as
consolidating its position across the 'saturated' European market,
writes Tom Armitage.
Currently Europe's third largest dairy co-operative, the company has approved a 2005 investment budget of more than €110 million, which it will use to step-up co-operation between its German, Dutch and International divisions, responsible for the development and production of its so-called 'white' product groups - referring to milk, yoghurt and dairy-based desserts.
Although the investment figure is significantly lower than that of 2004, it excludes an additional €50 million, set-aside in previous budgets as part of its ongoing long-term investment strategy.
The dairy co-operative will continue to upgrade facilities at its Netherlands-based research and development facility in Wageningen, which was responsible for the development of Campina's successful extended shelf-life fresh liquid milk brand, launched in March last year.
Campina will also use the investment to build an international plant for innovative dairy-based beverages in Aalter, Belgium, which will consolidate its ability to produce branded, consumer dairy products for export to the rapidly expanding southern European and Asian markets - areas in which the dairy co-operative already has a modest foothold.
Justinus Sanders, Campina CEO, comments that "Europe is a saturated market", adding that although Campina's turnover in the Far East is currently modest, there is a substantial opportunity for its strongest performing Campina brands - which include a range of dairy-based beverages and desserts - to build up a "defendable market position."
"If the market in an Asian country grows 20 per cent in a year and your own business grows 15 per cent, you may lose market share, but you still have 15 per cent growth," he added.
Although the investment budget has already been approved by Campina's Members' Council, which represents 9,000 member farmers across the Netherlands, Germany and Belgium, it still must gain approval from the Members' Council of Arla Foods, the Danish-Swedish dairy group with which it is set to merge in May later this year.
Combined the two leading European dairy co-operatives with 27,000 employees, to be called Campina Arla, would have annual revenues of €10 billion.
The ingredients division - that would include dutch lactoferrin supplier DMV International and Arla Food Ingredients - would contribute about a tenth of this figure, some €1.38 billion, rolling over 665 000 tonnes of ingredients.
But customers will have to wait a few months to find out the future of their supplies as regulatory bodies, and the board at Campina Arla, decide on the fate of the ingredients units in the merged group, slated for the middle of next year.
