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About Ingo Müller

 

Following his apprenticeship with Nordmilch eG, Ingo Müller gained career experience in many different parts of the company. In the year 2011, he took on the leadership of the Ingredients business area as well as Quality Management and Research and Development. He had previously been Director of Agricultural Affairs and Managing Director at Nordmilch eG (2009-2011).

In September 2016, the 47-year-old graduate dairy industry engineer was appointed CEO of the DMK Group.

Müller is married with two children.

Looking at this combined annual report and sustainability report – how satisfied can you be with the year 2018?

We’ve mastered major internal challenges in a difficult market environment and earned a solid profit at the previous year’s level.Today, DMK is in a stable position, well financed and in a position for targeted growth, moving forward in accordance with the strategy. This indicates to me that we've taken the right course and that the combined efforts of our 14,000-plus employees and dairy farmers are worthwhile.

Following a good year for the dairy industry in 2017, the market took a more difficult turn in 2018 ...

The rapid movements in the market are a major challenge for our entire industry and determine around two thirds of our performance. That will not change. As an enterprise, we therefore concentrate mainly on the remaining third, so as to earn a profit that allows us to pay our dairy farmers competitive milk prices and to make essential investments. And that's not a one-off task, we have to make permanent efforts to move forward.

We also mastered the demands on us well in the year under review - constantly rising requirements, particularly in sustainability issues, such as sugar reduction, packaging, animal welfare and sustainable feedstuffs. In this regard, we’re positioned to help transform the industry even beyond our own corporate boundaries with our DMK 2020 sustainability strategy, the preliminary work on the realignment of our Milkmaster Programme and a wide range of initiatives. We also took the initiative in 2018 at the higher, sectoral level for that purpose, and suggested the idea of a joint sector strategy for the entire dairy industry. Politicians and professional associations welcomed this thought.

Looking at our own performance, it is also true to say that despite our stable results we are not happy with the milk price paid to our farmers in 2018. The level of the payments was lower across the industry as a whole in 2018 than in the prior year because of the market situation. In this environment, we only achieved a milk price in the mid range for Germany - this does not match up to our aspiration. We continue to see our tasks here as follows: we’re in the midst of a complex change process and our investments in the market have not yet led to the expected results on all points. However, we’re already seeing significant progress. For this reason, we will continue to work hard on concrete measures aimed at achieving a further marked increase in value added in the various business units by 2020 and therefore also a consistently competitive milk price.

 

For the members of the cooperative, resigning is the clearest way of expressing their dissatisfaction. At the end of the year, dairy farmers with almost one billion kilos of milk left DMK.

That’s correct, and these resignations tendered in the year 2016 were a clear sign of discontent, which we took on board. Since then, we have successfully redesigned our company and the remaining dairy farmers are also benefiting from the progress made to date. In other words: if resignations are an expression of dissatisfaction, we can count it as approbation that we’re welcoming new farmers to DMK again now.

For us as an enterprise, these resignations were also an opportunity, which we mastered well operationally and will continue to use to our advantage in the near future: the portfolio that we streamlined for some countries, customers and factories comes mainly from the not-so-profitable commodity segment and, what’s more, would have made little contribution to our value added in the current year and beyond. We can also fully utilise our factories’ capacity with our present volume of milk. We’ve also opted for toll production contracts, which present no cost disadvantages compared to processing our own milk.

 

Saying that DMK has “redesigned” itself sounds pretty comprehensive – exactly what is different now because of the change process?

If I say “everything”, it’ll sound like an exaggeration. However, it’s a perfectly accurate description of the impression I have when I consider today a company that has had a radical makeover in the last two years: we’ve established a new organisational structure, we’re overhauling our portfolio, setting up new processes, implementing a new corporate culture and, above all, we’ve shed our understanding of ourselves as raw milk processors. And that is the most important thing: If we still want to earn a competitive milk price for our dairy farmers tomorrow, we need to position ourselves as what we are post-realignment – a modern food manufacturer. That means we have to think from the point of view of markets and customers, not of raw milk. Which also means putting value added before growth – it’s not primarily about how much milk we process, but how much the processing brings in for us and our dairy farmers. We therefore have to focus firmly on our customers and consumers in all we do and, in the best case, set trends with our products rather than chasing them. We’ve already aligned our team organisationally to this purpose within the transformation process. However, our corporate culture also needs to change in order to achieve this goal. In concrete terms, we have to learn to change our way of thinking, cast off former blinkers, go new ways and, above all, pull together in the same direction.

That sounds good in abstract terms, but what exactly do you mean by setting trends?

When we take it easy in times of rapid change, we stand still. Whether it’s the impact of digitisation, which is bringing new players into the food market, or consumers’ changing demands, which are shifting towards convenience, sustainability and functional food – we have to think deeply about consumers’ wishes at all times and work today on the products they will want to buy tomorrow.

We managed to do that well in many areas last year: Not least, our structured trend management - tailor-made for DMK, with external and internal trend scouts - is surfacing attractive new product opportunities. With MILRAM, we’re developing better than the market in almost every area. The baby food factory that we have just opened in Strückhausen provides a base platform for the major growth opportunities we see for the Humana brand. We have already started expanding our market share in many countries with a more honed profile directed at mothers as a target group. In the ice cream segment, our colleagues have entered successfully into partnerships with famous brands such as Baileys or MILRAM and are expanding these partnerships profitably.

In that case, after two stressful years DMK will have a more peaceful existence?

Yes and no: we’ve completed the phase of intensive reconstruction and organisational realignment. And our company’s DNA is set and will define our actions in the future. However, we can never allow ourselves to think that the hard work on our further development is done. To stand still would be a failure for a company of our size and in view of the breadth of our customer and product portfolio. Even if our day-to-day business is challenging, we have to look over our own garden fence and think along new lines. That will protect the day-to-day business of the future.

Our DNA will define our actions today and tomorrow and is based on six pillars: the cooperative structure, the production of top-quality food from milk, our northern origins, the regional focus on Europe, our belief in sustainable entrepreneurship and close proximity to our customers.

In somewhat over-blunt terms, if we don't take care of our future direction today, we needn't bother to turn up tomorrow. That’s why we gave intensive consideration in the year under review to what we could be facing in the future, and developed a vision of DMK 2030 from that. Working out concrete details of the associated actions in all business units is one of the main strategic issues in the current fiscal year.

What does the target image mean for the company?

New organisational structures and processes can be implemented with relative ease. But that alone won't get us very far. Rather, we have to change our company’s culture to allow us to achieve our long-term goals. And this change starts in the mind. With our target image 2030, we want to motivate every single employee to use their new, added scope, contribute new ideas and part with the notion that all we do is process our raw milk. However, there’s no magic formula for that. We’re therefore creating new formats and measures all the time so that we can take this direction. Because there’s no such thing as an assembly kit for a new corporate culture. Employees meet at our “Brainfood” events to discuss the topics of tomorrow with trend researchers, for example. Our “different thinking” space, in turn, provides space for a new meetings culture and therefore encourages cross-departmental, open and creative sharing. And our new vision “We want to be the first choice. For always.” will support the direction we've taken by summing up our vision, mission and values succinctly and clearly.

A new strategy, then?

No. The focus on 2030 is neither a new strategy nor a new restructuring programme, but rather an evolution of the course we’ve taken in the last two years. We will stick to that course in the future and not change it because of short-term market movements. If we want to improve and save costs at this point, we have to decide where we want to get to. Otherwise, we’re making short-term decisions that will bar our way in the future and lead to double work. The business is and will remain challenging, that’s clear. However, if we look beyond our own garden fence we’ll be securing the day-to-day business of the future.

To sum up: what challenges does the DMK Group have to address?

With our chosen path, we’ve created the foundation from which we can look to the future with an open mind for further developments and adjustments. What will our environment look like in the future, what will shopping look like in the year 2030, what will consumers want, who will our competitors be, how will digitisation affect our business? We have to find answers to these questions so that we know how to develop our business and set it up competitively for the long term in a highly competitive environment. Let’s take the smartphone as an example. The technology in the devices only changes incrementally year on year. However, when you look back over 10, 15 years, our everyday lives, the way we get information and consume media have been completely turned upside down. That’s why we have to keep our eyes constantly on the future, so that we can use these processes for the DMK Group’s development.

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Business development