Our DMK

Inflation, supply bottlenecks, energy shortages and a climate debate which is assuming radical forms: there was a lot for the DMK team to do in 2022. So we tackled it together and ensured by our commitment that the people of Germany could put a little bit of security into their supermarket shopping trolleys when they buy our products, in the knowledge that we understand our role in sustainability. In these turbulent times, however, we also kept our long-term goals in mind. We ushered in a new era for the DMK Group in 2022 with the production launch of our plant-based alternatives. At the same time, we strengthened our core business with milk-based products, honed the profiles of our own brands, and expanded cooperation with our partners in the food service, industry, and retail sectors. And we also took important steps on our farms by launching innovative projects to reduce CO2 emissions there. With these measures, we are moving step by step further along the path to the future as set out in our Vision 2030. With the wide-ranging demands on the entire DMK team, however, one topic also came into sharper focus; the shortage of skilled workers presents a challenge for the entire economy and demands a long-term change in our thinking. In short, a lot happened in 2022. Let us therefore take a close look at the events and successes of the past year - in conversation with our Management Team and external experts, and in our written report below.

If we hadn’t noticed it before, it was obvious by the time we reached the supermarket checkout: price levels increased in 2022 on a previously unimagined scale. With a record high of 10.4% in October 2022, inflation in Germany reached its highest level in 70 years. Purchasing power fell correspondingly sharply and has barely recovered to date. Although consumers are sticking to well-known trends such as the desire for regionality and sustainability, they are basing their purchasing decisions more on price again (more in the chapter on “Market & Trends“).

The situation was (and remains) an endurance test for everyone. The rapid geopolitical and economic changes also forced the dairy industry to take action. We mainly have our team spirit to thank for our success here, but it is also attributable to our clear strategy and courage to think innovatively. As a result, we have become more agile and can react more quickly to the changed environment.

In 2022, for example, we managed to secure the supply chain, although bottlenecks in the procurement of raw materials and therefore also in the delivery of our 2,000-plus products to our customers became apparent from March 2022 at the latest. Close interdepartmental cooperation in particular made it possible to act quickly here. At the same time, the entire DMK Group benefited from the "One Finance" and "Pacesetter" programs, which ensured efficiency and transparency in the figures through precise controlling and a clear optimization course, among other things. Partly as a result of this and thanks also to the latest digital planning tools and strong logistics, we were able to meet consumer demand in 2022. The result was clear: 2022 has been the DMK Group’s most successful year ever. Marketing and production ran (and continue to run) safely and according to plan, and consumers enjoy a high degree of security of supply. In line with market developments and an effectively targeted product portfolio, the milk price paid to our dairy farms also rose to an all-time high in 2022 (more in the section on “Farms“).

It was not only the availability of raw materials such as sunflower oil or cereals that was unstable in 2022 and created a need for rescheduling. Energy also called for quick action. This was mainly due to the reduced gas volume, which threatened losses in energy-intensive factory production.

DMK has reorganized in the past few years to deal with such events, and has recently made heavy investments in conversion work and upgrades to DMK factories. The company complied here with its established policy of using all resources as economically and sustainably as possible. In line with this, the use of renewable energies was also continuously expanded (more in the section on “Factories“).  At the same time, new concepts for dealing efficiently with fluctuating gas and electricity volumes helped to ensure resource-saving energy management. These efforts were actually intensified further in 2022. Right at the start of the war in Ukraine, all DMK factories prepared to use all available resources even more flexibly, economically, and effectively than before. Thanks to simulations and foresighted crisis management, gas and energy in particular were used so efficiently that ongoing production could be maintained despite the threat of bottlenecks.

We can’t emphasize it enough: DMK’s people are our greatest asset. Their passion and commitment ensured in 2022 that we had a reliable supply of products available in the supermarkets in the usual high quality. Everyone proved that our continuous exchange of knowledge and cooperative way of working are real assets. That’s why we at DMK want to go on developing the people in the company and their talents. That way, everyone wins in the end - the employees, the company and ultimately also the consumers.

At the same time, the development of skilled workers is also an important issue for DMK’s future. Because the combined knowledge, the talents and the solid cohesion of our team are strengths that make us unique and that we want to hold on to. And to ensure our success, we also made major efforts in human resources development in 2022.

The shortage of skilled workers has grown into a recognized problem in recent times. In certain sectors of the economy, the recent crises have even made the situation worse. So it's no wonder that "new work" has become a buzzword in the competition for qualified employees. But what does "new work" actually mean? The term describes a new world of work in which we work together autonomously, collaboratively and in a spirit of trust, while at the same time more individual lifestyles are becoming possible. In other words, new work should enrich people's daily work and lives and open up new opportunities for companies.The loss of many workers as the baby boomers reach retirement  and the new demands of younger generations such as the millennials and Gen Z are fueling this development. As a company, DMK cannot and will not close its eyes to this change, so as to remain an attractive employer for the brightest minds in the dairy industry. To ensure that people at DMK can continue to do their best work, we further expanded our employee development programs in 2022. We also stepped up our recruiting efforts and will continue to develop in this area in the current year.

Our entry into the world of new work starts with the construction of our new headquarters in Bremen. The new building was designed with New Work in mind and is intended to enable independent and collaborative work in all departments. The teams at our headquarters and in our factories are to be given the freedom to develop their potential and to share expertise and knowledge from different areas quickly and easily. At the same time, this offers the opportunity to work more flexibly and to compensate for bottlenecks in certain professions. In this context, digitalization also opens up new possibilities. The active involvement of employees is crucial here, because precisely this lively exchange and agility in action contributed to our successes in 2022. In addition, programs such as "Leadership Next Level" develop managers’ skills, enabling them to support their teams even better in their daily tasks. This creates professions that offer attractive roles for young and old alike and position the company well for the future.

Following the positive experience of the previous year, the "Passion" development program entered its second round in 2022. Employees from various departments had the opportunity to discover and develop their professional strengths so as to incorporate them better into their work in the future. The intention: enabling every individual at DMK to develop their full potential means that everyone benefits from the shared pool of personal skills and talents.

This development is also available to career starters: In 2022, "Grow" was continued, a program in which all trainees communicate at eye level with their trainers and the rest of #TeamDMK. The constant dialog is a win-win situation for both sides, because our trainees can act self-effectively and play an active role in shaping their everyday working lives. At the same time, their managers benefit from the exchange, which increases the overall quality of the training. In this way, our newcomers get the best possible start to their careers and immediately become a valuable part of the team.

To ensure that the development of our executives, specialists and trainees takes place on fertile ground, DMK has been committed for years to creating optimal working conditions for our team. Remote work, home office and a new company building designed to promote collaborative working are just a few examples. Nevertheless, there is still scope available. That's why we are constantly looking for ways to improve ourselves and our work further with "TIGER - Continuous Improvement". The program has been running at the factories since 2020. In 2022 it was rolled out to the administrative departments so that we could take a fresh look at our own work with a wide range of measures, discovering significant optimization potential in the process. The focus is on the six "buckets" in which we look for potential.TIGER is supported by our Corporate Improvement (CI) Engineers - a group of women and men who drive our continuous improvement with their dedication. You can read about how they go about it here One thing is for sure: they are the embodiment of personal responsibility and inspire all their colleagues with their efforts. Thanks to TIGER, around 18 million euros were saved last year alone, while at the same time completely new approaches were found to make everyday work easier. That's successful teamwork!

Continuous improvements are a focus in every area of DMK, including the 20+ DMK factories. Since 2020, thanks to TIGER, important optimizations have been gradually made to their production processes, including raw materials processing, workflows and safety, as well as the responsible use of electricity, gas and water. We continued to adhere to these high standards in 2022 and to develop new solutions. Particularly in times of gas shortages and bottlenecks in the supply of energy and raw materials, we benefited from this program and were able to react quickly - and still successfully implement scheduled projects such as the conversion of the Everswinkel factory and the production launch of vegan products.

A special milestone last year was the launch of our vegan product world. To make this possible, the factory in Erfurt was converted for the production of our non-dairy range. In March 2022, the go-ahead was given for the first plant-based products under the MILRAM brand (read more in Chapter 3 “Market&Trends“). The new range has been very well received by retailers and consumers.

Building on this success, DMK launched the first vegan cheese specialties for industry customers in the fourth quarter of 2022 under the project name "Velander", broadening its presence in this product segment even further. In addition, DOC Kaas optimized its own cheese production a modern production facility. To achieve this, the team in Hoogeveen in the Netherlands spent two years thoroughly examining the individual process steps and integrated them into a digital system, which now forms the basis for efficient control. Demand can thus be served even more accurately and process steps improved even more effectively in the future.

In 2022, DMK’s around 4,700 farmers once again demonstrated what can be accomplished with courage and commitment. They faced up not only to the summer of drought, but also supply bottlenecks in feed procurement, while at the same time fuel prices rocketed. Despite this, they delivered an average of 3.5 bn. kilos of milk - an amazing achievement given the many tasks and obstacles. The price increases for milk, butter and other important staple foods enabled farmers to earn a price of 53.60 cents per kilo for their milk

In addition to the new challenges of 2022, our farmers also stayed on the ball with regard to the major issues of sustainability, climate protection and animal welfare. They displayed courage and a willingness to change, thus making a decisive contribution to the company's transformation. As an agricultural cooperative, the DMK Group supports dairy farms in various ways. Above all, "Milkmaster" has become established as an important program that also rewards farmers' commitment in areas such as climate protection, animal welfare and sustainability with additional payments. It is supported by other valuable tools such as the voluntary Agrar-Klimacheck, which farmers like to use in taking a proactive approach to the issue of sustainability on their own individual farms. But although modern agriculture has long since arrived in the 21st century, there is still much to be done. As DMK, we therefore want to support dairy farms with new ideas and concepts and master this major task together

The most important indicator of the success of the measures is the company's carbon footprint. This is to be reduced by a further 20% by the year 2030. DMK set this goal years ago as part of its corporate strategy in the area of sustainability. When the company joined the Science-Based Target Initiative (SBTi) in 2022, this and other sustainability targets were audited and validated. They thus set the clear direction for our future projects - including in the area of farming. An important pilot project with three selected farms and a competent group of experts was launched in 2022: "Net Zero Farms". This project is intended to provide important insights into the reduction of emissions in modern agriculture. The project will run until 2025 and its results will form the basis of new concepts for reducing greenhouse gases from which all DMK farmers can benefit in the future.

Read more in the chapter on “Sustainability” in our annual report.

As a cooperative, strong cohesion is practically in DMK's DNA. Dialog with all members is also an important element of this. During the Annual Assembly of Representatives in Hanover and at numerous smaller events, Ingo Müller (CEO) and Dr. Frank Claassen (CFO) talked about the status quo of the DMK Group and discussed current and future challenges with the representatives. In addition to the climate and energy crises and persistently high inflation, society’s and politicians’ expectations of modern food and agriculture were on the agenda. The latter topic in particular is placing high demands on agriculture with the European Green Deal and the farm-to-fork strategy it contains. It was therefore all the more important to give their concerns space during the representatives' meeting so that they could be addressed and incorporated into strategic decisions in the future. The Young Farmers' Working Group (AKJM) also provided significant thought-provoking input. This institution gives young farmers under 30 the opportunity to put forward important ideas for the future of DMK and to prepare themselves for future work in honorary office. In 2022 the working group met for several meetings, at which the 72 members had the opportunity to discuss current events in the dairy industry and exchange ideas on a supraregional level.

The year 2022 was a success for the DMK Group. We can be proud of that, but we cannot and will not rest on our laurels in view of a rapidly changing world. The current crises prove how important adaptability and agility have become today. Thanks to the transformation at DMK, we have gained in cohesion, flexibility and courage, proving that we can gain in stature. We want to hold on to this idea, and continue to make it a central aspect of our work. No one knows what the next few years will bring. But we will be there to face whatever comes. Just as we have done successfully this year. So let's get going!