Dairy Ingredients Division
The strategic realignment in mid-2019 means that Dairy Ingredients forms one of the two key pillars of the HOCHDORF Group. 2019 was initially overshadowed by the successor solution to the «Schoggi law», which came into force on 1 January 2019. The new ruling led to more intensive competition in the domestic market and also to a significant deterioration in our market position in milk procurement: as part of the new regulation, substantial financial support was withdrawn from the export raw material subsidy. The Cereals & Ingredients division was dissolved in the course of 2019 and the continuing operations were integrated into Dairy Ingredients. The product portfolio was further streamlined. Some new, innovative products were also successfully launched onto the market – both domestically and internationally. Despite all the challenges, we were able to successfully defend our leading market position for roller-dried whole milk powder for the Swiss chocolate industry and even develop our position further in important premium areas.
The milk, cream, whey and permeate quantities (liquid quantities) processed in 2019 level was 677.8 million kg (previous year 661.0 million kg), around 2.5% above the previous year. Only Uckermärker GmbH made a contribution towards increasing the production quantity. It reached agreements with several regional direct suppliers to become less dependent on the spot market. In Switzerland, HOCHDORF Swiss Nutrition Ltd (HSN) processed a liquid quantity of 391.4 million kg (previous year 408.9 million kg; –4.3%).
The decline in Switzerland can be explained by the lower milk yield as a result of the dry summer of 2018, the significant fall in sales for Baby Care, the lower milk production in the second half of the year due to the uncertain financial situation as well as the poorer milk prices in competition with industrial cheese making as a result of the follow-on solution from the «Schoggi law». Despite the challenging procurement and financial circumstances, HSN always managed to maintain supply and so defend its market share. HSN was largely able to compensate for the financial consequences of the «Schoggi law», although this was at the significant expense of milk prices paid.
The integration of the Cereals & Ingredients division was largely completed by the end of the year.
Some new, innovative products were developed and successfully brought to market – both domestically and internationally – including a vegan, palm oil-free fat powder and a vitamin D compound.
The B2B market remains very competitive. We expect milk procurement to remain challenging in 2020 as a result of the follow-on solution to the «Schoggi law». It is therefore important that we continue to optimise our customer and product portfolio. The best possible utilisation of the plants remains a central element of the HOCHDORF Group's economic success.
Following the sale of Uckermärker Milch GmbH at the end of February 2020, we expect net sales revenue for the business year 2020 in the region of CHF 190 to 210 million for Dairy Ingredients.