Up

Combined Annual Report and Sustainability Report 2018

Trends

In times when food becomes fashion – ever more chic, exotic, individual – early adoption of current and future trends is the basis of a modern food manufacturer’s business success. Against this background, DMK minutely observes and analyses trends from Germany and the major cities of the world and develops its product range in response to what customers will want to buy tomorrow: healthy, high-quality foods which have been responsibly manufactured*,* promise a high level of convenience and fulfil individual needs.

Even today, healthy food is considered important by 96 percent of women and 88 percent of men. The to-go trend for foods that can be eaten while people are out and about continues unabated, as does healthy hedonism, which focuses on healthy food that is fun and involves no self-denial. Products that were utterly unknown in Germany a few years ago, such as goji berries or skyr, are now available as standard in every supermarket, tokens of the experience trend which uses food as one of the ways to discover foreign cultures.

Emotionalisation as a success factor

Among the most important trends in food is the fact that nutrition is becoming a lifestyle issue:
Food experiences and stories are exchanged on social media platforms and in blogs. Food intake is becoming an expression of personal lifestyle. Against this background, DMK successfully continued to emotionalise its brands in 2018, as part of its positioning as a modern food manufacturer.

 

The consumers of today want to know what a brand stands for and where it comes from. With our claim “MILRAM - From the home of freshness” and cheeky products such as MILRAM Kalder Kaffee, we emphasise MILRAM’s northern origins”.

Matthias Rensch, COO DMK Brand

The company made its northern German origins the central focus in the reporting period for the MILRAM brand in a large number of TV spots and various online and POS marketing promotions, as well as by making a number of changes to the packaging of the FrühlingsQuark and Gewürzquark curd range. This has proved a success with consumers, as demonstrated by an award - one of several - from the Lebensmittelzeitung newspaper, in which MILRAM was rated among the “Top brands for 2018” on the basis of surveys among 30,000 households and 40,000 individual shoppers. Further evidence is the highly positive trend in the brand again in 2018, particularly with self-service cheese and with the Gewürzquark and Kräuterquark curd products. DMK is continuing this strategy in the current fiscal year with further “MILRAMisation”, which is reflected, for example, in new products and relaunches such as MILRAM Kalder Kaffee, the Friesen Drink and Moin cocoa and which gives even more prominence to the home of the brand.

DMK continued to work successfully on the further positive charging of the Humana brand as well. This was primarily directed at mothers, under the claim “für Mami und mich” (“for Mommy and me”). For the innovative myHumana pack, for example, DMK made a detailed examination of what mothers wanted and implemented their wishes.

Structured trend management

DMK vies with a wide range of competitors in the different market segments. With its realignment, the company focused on the demand side and, particularly in the Business Units Brand and Private Label, is increasingly emphasising less easily substitutable products which fulfil the needs of different customer groups. These include, for example, Business Unit Private Label’s wide skyr product range, MILRAM Food Service’s part-filled to-go single-portion tubs and GMO-free milk, which once more took DMK to market leadership in 2018 with around 3 billion kilos in 2018.

Since there will no longer be one type of consumer in future, the aim is to identify various trends early and integrate them into the product portfolio. DMK is therefore not only researching and analysing long-term megatrends such as sustainability, functional food and convenience, but also pursuing a structured trend and innovation process.

 

“Structured trend management provides a foundation for the development of the innovative concepts that consumers want.”

Dr. Philipp Inderhees, Global Head of Group Strategy

Since trends arise in every part of the world, external trend scouts gather inspirations for DMK in the major international trend cities and, like the internal scouts, record observations and ideas with a special app. In October 2018, the major consumer food trends for the coming year were presented at the DMK Trend Summit. Participants developed initial product ideas for their departments right on the spot at the presentation of the annual trend scout study. In total, more than 1,000 inspirations produced by the scouts and aggregated into trends were incorporated in the annual analysis. The innovation and trend specialists filtered out a total of 30 subtrends for the five key topics.

DMK derives so-called “opportunity spaces” from the relevant trends as a basis for innovations. The goal is to identify customer desires before consumers formulate them and use the proximity to consumers to develop forward-looking products and services.

Networked innovation initiatives

So as to develop innovative solutions for retailers and food manufacturers from changing requirements, DMK entered into a greater number of partnership-based innovation projects in the year under review, and held various interdisciplinary innovation and idea workshops in which customers and external partners were also sometimes involved.

DMK networks and manages projects across the different business units within innovation initiatives. The focus is currently on the long-term transition to responsible consumption and health-conscious nutrition as trends in today's lifestyle. DMK involves not only external experts, but also consumers in the creative process in selected innovation initiatives.

 

Trend towards less sugar

Innovation initiatives which were actively handled in 2018 included sugar reduction and possible alternative sweeteners. This topic is about operational implementation of customers’ demands on the one hand and proactive development of new products on the other. With this initiative, DMK is reacting to the trend towards a healthy diet, the importance of which is steadily growing. DMK took a whole series of actions to reduce the proportion of sugar in the products and is therefore also well positioned in terms of future political plans to reduce sugar.

“Considered, aware nutrition has emerged from the niche and become established in the mainstream. As a modern food manufacturer, we take that into account in developing our products.”

Matthias Rensch, COO DMK Brand

The first step of the innovation initiative is about the major challenge of reducing or substituting the sugar content in the existing range in such a way that the products convince consumers who are accustomed to sugar. For this reason, DMK is taking a cautious approach to development, reducing the sugar content in MILRAM products step by step and breaking down lactose in order to harness its natural sweetness. The company has firmly ruled out sweeteners and sweetener-based flavours for its branded products.

Along the second route, DMK is developing new products either with no sugar or sweeteners at all or with a low sugar content. An example of this is MILRAM Kalder Kaffee, which contains neither added sugar nor sweeteners and has been in the shops since March 2019.

DMK has already produced the MILRAM buttermilk drink Sorte des Jahres (“variety of the year”), the new varieties of MILRAM Feine Quark Creme curd cream and the MILRAM Food Service Skyr Dessert with reduced sugar. Along a further route of the initiative, the possibilities of the next generation of natural alternatives to sugar and accompanying innovative technologies will be identified and a roadmap with short-term, medium-term and long-term options drawn up.

Trend towards sustainable packaging

Transparency is one of the big trends in nutrition: where does the food come from, how is it produced? The spotlight is more and more on aspects of animal welfare, regionality, sustainability and social engagement. In a study conducted in 17 countries, 43 percent of respondents favoured GMO-free products and 37 percent preferred food from their own region. “The cheaper the better” no longer applies in the mass market. “Sustainability” and “regionality” are trendy, more and more consumers are opting for sustainably produced meat or yoghurt from regional farmers. In this context, packaging is also increasingly in focus. The German Packaging Act which came into force in January 2019 is only a first step in a new world of retailing and procurement, in which responsibility for the topic of packaging will move to the beginning of the value chain. And it is also the expression of another megatrend which is being promoted by politicians and consumers, which DMK is addressing with the innovation initiative “Future of Packaging” which is primarily about avoidance, recycling and a circular economy for plastics. Initially, the focus is on products for food retailers in the home market, other business areas will follow in succession. DMK will also extend the initiative to other packaging materials such as cardboard, aluminium and glass.

 

“It is everyone’s responsibility to avoid plastic waste, even beyond the new packaging law. Our answer is the ‘Future of Packaging’ initiative.“

Dr. Ralf Zink, Director R&T

The challenges are many: Packaging from renewable resources is unlikely to affect product quality, but it does have to be recyclable or compostable and provide information about the contents’ keeping qualities. In addition, although consumers are demanding more sustainability, at the same time they are increasingly spending money on smaller pack units, the ratio of returnable packages is falling and the amount of packaging is increasing because of convenience.

In this context, DMK took part in a total of eight research projects, commissioned several studies and set up workshops and pilot projects in the period under review. These were aimed at reducing plastics, improving recyclability and using renewable and compostable materials. DMK has already stopped using some plastics which other companies still have not reduced.

By developing new materials, the company wants to cut the proportion of plastics and avoid composites which are difficult or impossible to separate. For example, in cheese packaging DMK is working on a recyclable packaging system with special plastic trays made of mono APET and PET/PE and multi-layered lidding films. This allows new films to be manufactured by recycling. Another concrete project is the reuse of big bags in the Business Unit Industry.

Concrete actions developed

The goals of the DMK 2020 sustainability strategy include the implementation of three projects to improve sustainability in packaging materials. In the year under review, DMK worked on developing concrete measures. The challenge partly lies in meeting the increasingly concrete and sometimes conflicting requirements of different stakeholders such as politicians, consumers and customer equitably. In this context, DMK creates synergies and uses the innovativeness of its own suppliers.

The company held cross-functional, multi-day sustainability workshops with 20 suppliers in 2018. These pursued the goals of obtaining an overview of the market and identifying options for sustainable packaging. The focus lies on reducing the amount of materials used and replacing existing solutions with much more sustainable ones. The primary emphasis in the redevelopment of packaging is not only compliance with the new packaging law, but also “design for recycling”. For example, the myHumana pack is also noticeably lighter and has a smaller CO2 footprint than popular alternative packaging.

Research cooperations for intelligent packaging

In the year under review DMK also took part in external research projects with various German and international partners, for example in the fields of sustainable packaging materials for dairy products and intelligent/smart packaging systems. For example, the “IntelliDate” project which is supported by the Federal Ministry of Food and Agriculture (BMEL) is developing an app system for a smart label indicating food’s keeping qualities, which will counteract waste in food. A data logger with a chip contained in packaging will record environmental influences such as light, temperature and time, in the store or on the consumer’s mobile phone. The app-based system will help to support the identification of how long the product will keep at a given time (“best before end” date, or BBE). DMK selected an ESL (Extended Shelf Life) milk as a model system for the project and included a printed electronic sensor label in its packaging. The company hopes to make a contribution here to reducing the amount of manufactured food products destroyed due to incorrect interpretation of the BBE date by consumers.

More chapter topics

Business areas