Raisio has just signed a cooperation agreement with the DLA Group, a Danish group that coordinates wholesale trading activities for 31 raw materials companies in Denmark, Norway, Sweden and the Baltic States.
“Essentially we use group purchasing power to negotiate better conditions when dealing with multinationals to purchase crop protection products, fertilisers and raw materials,” said DLA Group's managing director Peter Iversen, explaining the group’s model and ethos.
By taking advantage of DLA’s bulk buying power, Raisio says it hopes to source raw materials such as non-GMO soy, vitamins and amino acids more cheaply.
The partnership with DLA is focused on procuring raw materials for Raisio’s feed business. However, Pasi Lähdetie, Raisio's director of grain trade operations, said that this is just a ‘starting point’.
“It is a learning process,” he told FoodNavigator. “It is difficult to predict whether we will end up adopting a similar approach in food, as this is the first time we’ve done this and we first need to learn whether this is the way we want to go.”
He added: “What I will say is that procurement cooperations are becoming more and more common. This is partly because there has been lots of consolidation in the raw materials market which creates an uneven playing field for smaller organisations, but is also because the markets we are operating in are getting more and more competitive each day, so we have to find ways of becoming more competitive ourselves.”
Combined logistics
Sourcing raw materials at a lower cost is a clear benefit of entering into a joint purchasing arrangement, but Lähdetie is quick to point out that it is not the only advantage.
“It is about the whole set-up; there are enormous benefits to running logistics together, particularly as many of the raw materials are being shipped from faraway countries. Also, cooperating on the auditing of suppliers saves time and cost.”
If Raisio does adopt a similar approach to procurement for the food industry side of its business, it is unlikely this would be through DLA Group, as according to Iversen, “99 per cent of DLA Group’s activities are in feed.”
Raisio produces feed mixes for farm animals and feeds for fish at three plants in Finland. Annually it uses more than 200 million kilograms of grain as raw material for these feeds.
The company is best known in the food industry for pioneering the Benecol brand of cholesterol lowering foods, but also owns other international food brands including Elovena, Dormen Foods, Carlshamn Mejeri, Nordic and Torino. It is also produces malt for breweries and develops lubricants based on domestic vegetable oil.
Raisio employs some 1,500 people and operates in 12 countries. Its main markets are Finland, the UK, Sweden, Poland, Russia, Ukraine and the Baltic countries.