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Our way 2030

Integrated Annual Report 2019

Message from the Elected Officers
Our DMK

The first choice. For always.

As Germany’s largest dairy cooperative, the DMK Group faces many challenges. Changing customer needs always point the way to immense changes in the company, and 2019 was no exception.

Everyone at DMK is aware that such transformations cannot happen overnight. That makes it all the more important to pursue a common objective. Our “2030 Mission Statement” is aimed at helping us to implement our strategy and effect sustainable changes in the company. It does not pursue a fundamental new direction, but systematically continues the course chosen by the DMK Group back in 2016. Last year, the key priority was therefore to achieve or finalise key milestones, and thereby take decisive strides closer to our goals.

“As the largest German dairy company, we want to evolve from a pure volume player in the dairy industry to a provider of selected products of natural origin.”

Ingo Müller, CEO of the DMK Group

There were many reasons for this, major social trends in particular. These were more sharply defined than ever in 2019: the individual diet is become a lifestyle, the supermarket a world of experiences for consumers. Nevertheless, people do not want convenience and taste at the expense of animal welfare, environmental protection and sustainability. Many consumers therefore look for products and brands that bridge the gap between these megatrends and that they can trust absolutely.

We as a company want to be that reliable partner for our consumers. We therefore continued to work on implementing our vision in 2019 – moving away from our positioning as a raw milk-driven, production-driven milk processor. Instead, we aim to be at our customers’ side, offering them clever product solutions in every phase of their lives. This claim is also reflected in our 2030 Mission Statement.

 

The way is still the goal.

We progressed further with the company’s restructuring in 2019. Here, too, we strictly followed our Mission Statement’s guidance and gave maximum value added clear priority over income-consuming growth. Our work centred on restructuring the business units and launching and reinforcing our new corporate culture for the DMK Group. This fundamental change ensures a greater focus and genuine value added – not only for our customers, but also for the company as a whole.

“We brought about a major transformation in the last few years. We can build on this foundation after the coronavirus crisis is mastered, so that our patience and hard work will pay off in the end.”

Ingo Müller, CEO of the DMK Group

We have now therefore achieved precisely the agility that is needed to respond to the fast pace of the current times. More than that, we have honed our company’s profile and thereby created the best conditions for implementing our Mission Statement 2030.

“Looking back on the past year, I am impressed by how many projects we’ve addressed within the DMK Group and all the things we’ve already achieved together.”

Ingo Müller, CEO of the DMK Group

In addition to the internal restructuring, we have enhanced and expanded our product portfolio where we see major value creation levers. We have also invested in the DMK Group's future by acquiring the Alete brand and building and renovating factories in Russia and Strückhausen. We lost around 1 billion kilos of milk at the start of the year 2019. That presented us with a huge challenge and affected virtually every area of the company. However, we successfully absorbed this loss by closing factories and introducing toll production models. The measures cost money, but safeguard our competitiveness. This will help us to make an even more targeted response to changing customer needs and to make our vision of DMK in 2030 a reality.

 

We have a clear vision.

Dairy products are the foundation of our product portfolio. That is not set to change in the future. We already have a wide diversity of dairy products and are working continuously to improve and adapt these in the light of the customers’ latest needs: for example, by using only natural ingredients and adding less sugar to MILRAM, Alete and Humana brand products.

2019 once more gave us the opportunity to use the long-standing experience and expertise collected in our company over the years. Our deep understanding of customers put us in a position to tackle the rapid changes in the market and provide our consumers with unexpected, genuine product innovations. A clear indication that we have set the right course for ourselves.

At the same time, we are taking the necessary steps to expand our product range where strategically appropriate and to advance into adjacent market segments, such as plant-based alternatives to classic dairy products. We are thus gradually extending our portfolio and helping the company to establish a new pillar.

“We consider areas for investment in detail, and define clear actions for every strategic step. This ensures that we can really tap a market’s growth potential.”

Ingo Müller, CEO of the DMK Group

The main focus of attention for the entire DMK Group continues to be the European market. This is our home territory, where we have achieved strong positioning. We will be enabled to serve our home market even better in the future by the reorganisation of the business units, which was pursued vigorously in 2019 and is to be completed in 2020.

We also concentrate on other strong core countries and regional bases such as Russia. A further plant has now been opened there in addition to an already booming factory. The local teams know their markets and help us to address prevailing market conditions even more effectively.

Many of the measures represent investments in the company. And our farmers will also profit from this restructuring. By installing the right framework for achieving our aims now, we will secure fair payment for all dairy farms in the long term.

 

“We can only follow the path to the future together. As DMK, we want to do our bit – as a food industry player and a supplier to food retailers, but above all as a farmers’ cooperative.”

Ingo Müller, CEO of the DMK Group

Expertise and emotion as the road to success

Our deep understanding of customers and comprehensive expertise in the B2B and B2C sectors paid off particularly well in 2019. This was the outcome of our realignment and reinforcement of the branded products business and the development of genuine product innovations, for example, but was also due to successful cooperations with licensed brands such as Bahlsen and Baileys.

 

Brand emotionalisation also contributed to our success. We were able to win customers’ hearts by setting out to shed the rational past and emotionalise our products with a unique story. We revitalised old brands and performed extremely well with product innovations. Furthermore, the cooperation business with our partners grew significantly and gave us the required momentum in new market segments.

 

We are aware of our responsibility.

Entrepreneurial thinking and responsible action are firmly anchored in our strategy. They set clear guidelines for all decisions, including those relating to our responsibility towards our farmers, partners and employees and towards society.

The topic of sustainability has therefore become even more central. It is important to us to take a holistic approach, which facilitates increased environmental protection and animal welfare along the entire value chain. We therefore worked across all departments last year on important projects such as the revision of the Milkmaster Programme, a means by which farmers can ensure sustainability on their farms even more easily. Added to this were numerous improvements in the factories and a new Supplier Code.

With all these and many more steps, we take responsibility for our actions and prove ourselves to be a reliable and trustworthy supplier. Furthermore, we have also invested in the future of the DMK Group by our engagement in sustainability issues. Not only have we successfully achieved important milestones, we have also created a foundation on which we can build and with which we can realise our goals by the year 2030.

 

Our values remain unaltered.

Fair, innovative, entrepreneurial – these core values have always described DMK. And we want to stick with them in the future. All the company’s decisions in 2019 were taken in line with these values. We will also continue to commit ourselves to ensuring that our employees and farmers benefit from the positive changes in the DMK Group. Among other things, this means improving the prices paid to our farmers and involving them in all key decisions.

 

 

“It’s clear to us that we often tried the farmers’ patience in the past. We are all the happier to have reached important milestones in 2019 which future-proof our company and thereby secure a competitive income for the farmers on a permanent basis.”

Dr Frank Claassen, CFO of the DMK Group

We want to build on the year 2019’s achievements in the coming months. Because of the coronavirus’s impact, we will and, indeed, must work even more closely togetherfarmers, employees and managers: on the one hand, to master this global crisis, and on the other, to further implement our 2030 Mission Statement. We have a strong belief in the sense of community within the company and in the fact that we can respond even better to the major challenges of our time if we all pull together.

The events of the past year demonstrate that this mindset serves us well. We are becoming ever more sustainable, innovative and efficient. In short: ever better. As a result, we are in an excellent position to continue on our course and to pursue the path to the future successfully.

 

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Integrated Annual Report 2019