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October 22, 2008

SIAL: Nordmilch sets out growth strategies

Nordmilch, Germany's largest dairy group, is looking to further expand its ingredients business as one of three core strategies to generate growth at the company.

Nordmilch, Germany’s largest dairy group, is looking to further expand its ingredients business as one of three core strategies to generate growth at the company.

Martin Ehrhardt, the head of Nordmilch’s international division, said the company has set its sights on three areas to drive the business forward – including boosting its supply of dairy ingredients to industrial customers.

“We want to grow using three ‘Is’ – innovation, industry and international,” Ehrhardt told just-food at the SIAL food exhibition in Paris yesterday (21 October).

Ehrhardt pointed to Nordmilch’s investment behind its Milram and Oldenburger brands as evidence of the company’s commitment to innovation. The group, he added, was enjoying growth in key markets outside Germany, including in southern Europe and Russia. International sales now account for over 16% of Nordmilch’s annual turnover of EUR2.3bn (US$2.95bn), he said.

However, Ehrhardt insisted that Nordmilch’s business-to-business ingredients division, which focuses on cheese ingredients, was critical to the company, particularly with the price of dairy ingredients remaining historically high.

“Our ingredients business is very important for us,” Ehrhradt said. “We can create specialities for industry and they pay very good prices.”

The rise in the cost of dairy commodities and the growing international nature of the sector has prompted industry watchers to speculate that the business will see further consolidation. The planned merger of Dutch dairy groups Friesland Foods and Campina, which is being studied by the EU, is expected to be just one deal in a wave of consolidation in the dairy industry.

Last year, Nordmilch CEO Josef Schwaiger reportedly said that he expects the company to collaborate more closely with other groups in the dairy sector.

Ehrhardt, however, refused to comment on the prospect of any tie-ups involving Nordmilch and its peers. “We definitely talk to a lot of people – but that’s like you do over the years in international business.”

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