Dairy giant's strategy: to ‘future proof' and win back trust
Germany’s biggest dairy enterprise DMK (Deutsches Milch Kontor) is back from the brink, says its new head of communications, and has embarked on a strategy that will generate greater returns.
“DMK Group is on the move. That will continue,” Oliver Bartelt, DMK’s newly appointed head of corporate communications said in answer to questions from IEG Vu.
“With an extensive structural program, we are committed to making DMK future-proof.”
DMK announced plant closures in June after what it called the most difficult year in its history. “With a slimmer organisation and further improvements in raw material planning, DMK wants to remain competitive and effective even in the case of decreasing deliveries of milk,” he said.
Bartelt took up the role on August 1 at DMK which, with 25 locations and 7,200 employees, is Germany’s No.1 and one of the largest players in the European dairy sector, processing more than 7 billion kilograms of milk annually.
He pointed out that the milk market is affected by a range of factors, including milk supply and consumer demand, but also exports and the milk price. “2017 looks better for milk producers,” he said. “We expect the milk price to be at least stable or even higher – it’s currently twice as much as the low of the 2016 summer months.”
“We cannot, however, look at the markets in isolation,” he said. “That is why the DMK Group, under the leadership of Ingo Müller, has launched a fundamental reorientation. We want to put ourselves in a position to pay a competitive milk price.”
'We have learned from our mistakes ... we hope a significant proportion of farmers will return'
DMK is hoping that a significant proportion of the farmers who have left will return. “It is true,” he said. “Some of the dairy farmers have been disappointed in recent years and have terminated. But it is also true that, thanks to DMK's better payout this year and the changes in the company, we are very confident that a large part of the members who have ended their contracts will want to withdraw the termination.”
“We have learned from our mistakes,” he said. “The clearly defined objectives are: to win back trust and to generate a competitive milk payment for all cooperative milk suppliers.”
“The reorientation has been in operation since March 2017,” he said. “It has four objectives: a tighter organisation, better raw material planning, a focused portfolio and an optimized spending structure. The processes involved in change are sometimes painful, but they put our company on course for the future. We will now implement our realignment consistently but with the necessary diligence.
He explained the effect of the changes. “The DMK Group plans to react to market developments with a new location and utilisation concept,” he said. “Part of that is that production in three plants is no longer required. This applies to the sites at Rimbeck in North Rhine-Westphalia, Bad Bibra in Saxony-Anhalt and Bergen auf Rügen.”
At a further location, in Nordhackstedt in Schleswig-Holstein, DMK plans to discontinue slicing and packaging. All these measures have been submitted to the supervisory board for approval. “After the approval by the supervisory board, DMK will carry out negotiations on interested parties in close consultation with employee representatives and agree on social plans and support measures.”
New food trends
He highlighted the accelerating growth in new trends in food, which the company tracks at its research and innovation centres in Zeven and Edewecht. “Food trends are competing, benefiting consumers,” he said. “The trends and trend products speak to different consumers.”
“Consumers are facing an ever-growing supply of nutritional trends and specially tailored foods,” he said. “For the trade and us as a manufacturer, it is all the more important to distinguish the trends in their popularity, popularity and future potential at the product level and to consider them successfully for special target groups.
“We are pursuing this strategy in all business segments, whether branded or own-brand. It is here that we see the big potential for the future.”