A clear demonstration of its faith in the growing whey-based ingredients market, DMV International will pour nearly €60 million into upgraded processing and food ingredients operations in The Netherlands, reports Lindsey Partos.
Owned by Dutch dairy co-operative Campina that is currently in merger discussions with Denmark's Arla Foods, DMV will focus on rolling out high margin, low volume food ingredients for the global whey derivatives market, currently enjoying double-digit growth.
In parallel, the high volume, lower value ingredients, currently produced at its facilities in Veghel, will be outsourced to third parties, once the new facilities are up and running.
"Existing and potential market opportunities drove our decision to invest heavily in whey-based ingredients," a spokesperson at DMV explained to FoodNavigator.com.
Compared to other dairy ingredients, whey and its various fractions hold some of the most promising value for the food and dairy industries.
With improved methods for extraction and purification, whey fractions can extend product development possibilities with new nutrition and functionality.
Whey is comprised of protein, lactose (milk sugar), minerals (calcium, phosphorus and magnesium) and fat. Whey protein contains alpha-lactalbumin, beta-lactoglobulin, bovine serum albumin, heavy and light - chain immunoglobulins(Igs), and proteose-peptones.
Traditionally, whey was a by-product with a negative value from cheese production; but in the 1950s the US started to add value to the by-product.
Since this time the ingredient has seen a considerable rise in demand, notably on the back of the sports nutrition and functional food market which uses whey protein concentrates and isolates extensively.
Like functional foods and drinks, value-added whey fractions made their market entry in Asia, notably Japan, with penetration first targeting sports nutrition and dietary supplements, followed by infant formula and food.
The US and Europe came next in line, with ingredients firms initially targeting sports nutrition and dietary supplements. Food, according to analysts 3A Business Consulting, has been the last zone for market penetration identified by the ingredients firms in both the US and Europe.
In 2002 consumption of the whey products sweet whey, demineralised whey, whey protein concentrates (WPC) and whey protein isolates (WPI), came in at nearly 770,000 tonnes in western Europe alone.
Within this area, third generation products that can command higher prices have but a thin slice of the market.
"This is a game for the most advanced dairy ingredients companies, working with leading-edge end users," says Tage Affertsholt, an analyst at 3A Business Consulting.
3A estimates the market for lactoferrin at about 100 tonnes.
But production capacity is there to ensure future supplies. DMV claims to currently have ample capacity in the region of 22,000 tonnes, divided between its Dutch and US plants.
DMV could not disclose any details about the first batch of commercial products to be rolled out of the new facilities but they are expected in the third quarter of 2006.
In addition to the whey processing unit, and a further factor in the 'Veghel Force' project, DMV will build a new facility for its 'compounded' food ingredients - functional ingredient systems, such as toppings and fat concentrates.
News of DMV's investment slots into the company's overarching plan "to give priority to a market and innovation driven approach on the one hand and a focus on efficiency in operations on the other hand", according to Alexander R. Wessels, managing director of DMV International.
By the end of the year, the company will have a new R&D innovation centre located in The Netherlands' 'food valley' Wageningen region.
The centre will be funded by an €8 million investment from life sciences venture firm BioPartner. A further €2 million will come from DMV itself.
DMV continues with investments and market decisions marked down in the agenda more than a year ago, despite the shadow of the intended merger.
Not yet signed off, if the merger with Arla Foods goes through, combined the two leading European dairy co-operatives with 27,000 employees, will have annual revenues of €10 billion.
The ingredients division - currently represented by Campina's DMV and Arla Food Ingredients - would contribute about a tenth of this figure, some €1.38 billion, rolling over 665 000 tonnes of ingredients.
Even though advanced dairy ingredients firms, such as DMV, Arla and Germany's Milei, are all working in the niche area of fractions, there are still specialists.
In Europe Danish firm Arla leads in alpha-lactalbumin (largely used in infant formula), and DMV in lactoferrin, the increasingly popular meat preserver.
Strong on production, these dairy ingredients firms are taking their know-how to end-users further afield. "Some of the most advanced companies in production in Europe - such as Arla, DMV, Armor and Borculo Domo - are working with end users in other geographical zones," explained Affertsholt.
"Milei, for example, has an alliance with Japanese firm Morinaga."