The dairy world is a dynamic one. To allow the company to constantly cater to changes and to continue to offer its member dairy farmers/owners and staff perspectives fo the future, Friesland Foods defined a long-term strategy plan by the name of Vision 2015 in 2006/2007. This plan centres around growth.
The plan was motivated by the announced reform of European dairy policy and the impliciations of a potential WTO agreement. The reform will have a profound impact on the environment in which group, the cooperative, and member dairy farmers of Friesland Foods operate. The main effects for the EU Member States will be the abolition of export support, less domestic supports and import protection, and the abolition of milk quota.
Friesland Foods expects worldwide demand for dairy products to outpace supply. This trend was already clerly visible in 2007. The broad spread of operations across various product categories and countries, as well as the solid market positions in countries recording robust economic growth in Asia, the Middle East and Africa, ensure that Friesland Foods is well-placed to achieve further medium-term and long-term growth and profit improvement.
The policy reform will have far-reaching consequences for both Friesland Foods and member dairy farmers. The price threshold for dairy products will be dropped due to the reduction in government subsidies and the liberalisation of the market. As a result, the selling prices of dairy product will gravitate towards the prices on the world market and increaingly show fluctuations.
Depending on EU decision-making, milk quotas for dairy farmers are almost certain to have been abolished in 2015. In the period up to 2015, Friesland Foods expects the volume of member dairy milk to increase by approximately 20 to 30 percent. Friesland Foods guarantees the purchase and sale of member milk. This milk will be used, among purposes, to meet the growing demand for milk by the company’s foreign production sites.
Targets
Vision 2015 aims to create sustainable value for the member dairy farmers.
The targets defined in Vision 2015 are as follows:
- achieving an average increase in net sales by 6 to 7 percent per annum in the period from 2006-2015;
- doubling shareholder value;
- facilitating an increase in member milk by 20 to 30 percent;
- posting a profit for the year that is structurally higher than 3 percent of revenue;
- offering dairy products to one billion consumers in 2015.
Strategy
To order to achieve the targets, a strategy has been developed that rests on the following three pillars:
I. Extend and defend core business in cheese, fresh and long-life dairy products;
II. Build business in emerging markets;
III. Create viable long-term ingredients business.
I. The first pillar is extending and defend core business in cheese, fresh and long life dairy products. This is achieved on the one hand, by streamlining processes and further cutting-costs, and by supporting the strong brands in Europe. Investments will also be made in brand development and innovation.
II. The second pillar is to build business in emerging markets, in particular Asia, Africa, the Middle East and Greece. This will mainly be achieved by growth initiatives in the countries in which Friesland Foods currently already has market presence, but also by launching activities in untapped countries. Export activities will be further stepped up as well.
III. The third pillar the objective to create viable long-term ingredients worldwide. Increasing consumption on a global scale causes a growing lack of milk ingredients in different part of worlds (e.g. Asia and Africa). With its ingredients-related activities, Friesland Foods build a bridge between the milk supplies of her member dairy famers and growing demand for dairy products in the rest of the world.