UPDATE: GERMANY: Supermarket power prompted FrieslandCampina cuts

By Michelle Russell | 10 December 2012

A spokesperson for FrieslandCampina said the firm is working out a plan for the coming year

A spokesperson for FrieslandCampina said the firm is working out a plan for the coming year

The power of German food retailers has forced FrieslandCampina to shake up its business in the country, including axing over 200 jobs, the Dutch dairy giant has said.

FrieslandCampina said today (10 December) it wanted to make its business in Germany more competitive. A series of changes include modernising three plants and "optimising" production and administration. Some 239 staff will be affected.

"We said in 2011 that revenues and in particular profit was disappointing in Germany because of competition and declining consumption," the spokesperson said. "The dairy market is under pressure. Large supermarkets are dominating the market and increasingly competing on price and we have to find an answer to that ... we want to maintain volumes and the market share of our Landliebe brand, so we had to do something."

The company plans to modernise its facilities in Cologne, Gütersloh and Heilbronn to adapt to an "intensely competitive" dairy sector in Germany.

The spokesperson said FrieslandCampina would invest "millions of euros" in its German operations. "We are not withdrawing, we will invest in production," the spokesperson said. "We want to invest in the existing plants. Later this year we will give more details on this."

The spokesperson declined to give further information on the plans. "We have to go into talks with unions. After that we can give more detail depending on the outcome of the talks," he said. "We are now working out a plan for the coming year and we believe in it. We have to invest in the country and take the measures we want to take to reduce costs and invest in the existing brands."

Germany is FrieslandCampina's second-largest European market after the Netherlands. Germany generates 14% of the company's sales, with the Netherlands contributing 25%.

In August, the company recorded an 8.7% increase in first-half earnings to EUR138m (US$218.8m). CEO Cees 't Hart said the increase was "despite the difficult market conditions in Europe and the steep drop in the market prices for butter and milk powder".

In Germany, sales increased in the first half of the year to EUR656m from EUR633m a year earlier.

Expert analysis

Dairy Product Market in Germany

This market research report offers a perspective on the actual market situation, trends and future outlook for dairy products in Germany.

Sectors: Dairy

Companies: FrieslandCampina

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UPDATE: GERMANY: Supermarket power prompted FrieslandCampina cuts

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