Campina secures investment strategy support for 2005

Related tags Campina European union

Campina, the Dutch dairy co-operative, has announced it is to focus
investment across its milk, yoghurt and dairy-based dessert
divisions in 2005, a move which will allow it to penetrate the
burgeoning trend for branded dairy products in the Far East, and
also consolidate its position across the 'saturated' European
market, writes Tom Armitage.

Currently Europe's third largest dairy co-operative, the company has approved a 2005 investment budget of more than €110 million, which it will use to step-up co-operation between its German, Dutch and International divisions, responsible for the development and production of its so-called 'white' product groups - referring to milk, yoghurt and dairy-based desserts.

Although the investment figure is significantly lower than that of 2004, it excludes an additional €50 million, set-aside in previous budgets as part of its ongoing long-term investment strategy.

The dairy co-operative will continue to upgrade facilities at its Netherlands-based research and development facility in Wageningen, which was responsible for the development of Campina's successful extended shelf-life fresh liquid milk brand, launched in March last year.

Campina will also use the investment to build an international plant for innovative dairy-based beverages in Aalter, Belgium, which will consolidate its ability to produce branded, consumer dairy products for export to the rapidly expanding southern European and Asian markets - areas in which the dairy co-operative already has a modest foothold.

Justinus Sanders, Campina CEO, comments that "Europe is a saturated market"​, adding that although Campina's turnover in the Far East is currently modest, there is a substantial opportunity for its strongest performing Campina brands - which include a range of dairy-based beverages and desserts - to build up a "defendable market position."

"If the market in an Asian country grows 20 per cent in a year and your own business grows 15 per cent, you may lose market share, but you still have 15 per cent growth,"​ he added.

Although the investment budget has already been approved by Campina's Members' Council, which represents 9,000 member farmers across the Netherlands, Germany and Belgium, it still must gain approval from the Members' Council of Arla Foods, the Danish-Swedish dairy group with which it is set to merge in May later this year.

As reported by​ last month, the proposed merger​ will create a company with sales of more than €10 billion, which will also control an estimated 13 per cent of the EU milk market and rank as the world's second largest dairy group, behind Swiss food giant Nestlé.

The merged companies, which will operate under the new trading name Campina Arla, have already outlined their common objective to strengthen sales of their branded, consumer dairy products - although the deal is still subject to regulatory approval from the European Commission (EC).

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