Dairy Ingredients to become "Food Solutions"

By setting up a whey competence centre and developing vegan powdered products, Dairy Ingredients is following the trend towards functional ingredients for the food processing industry. National measures to combat the Covid-19 pandemic led to a sharp increase in domestic demand for milk products and reduced availability of milk for HOCHDORF. However, with the exception of cream products, it was possible to avoid bottlenecks in supply to a large extent. Net sales revenue of CHF 206.7 million is within the projected range for 2020.

In Switzerland, HOCHDORF Swiss Nutrition Ltd processed a liquid quantity (milk, cream, whey and permeate) of 335.8 million kg (previous year 391.4 million kg; –14.2%). The reduced liquid quantity can be explained chiefly by higher domestic demand for milk products during the Covid-19 lockdown in spring and autumn/winter of 2020. Therefore, we were not able to completely fulfil the agreed cream deliveries to our customers. Due to the global pandemic, the Swiss premium chocolate industry required smaller quantities of milk powder. The main reasons for the reduced calls are the lower chocolate sales in the duty-free and Swiss tourism sector, as well as lower exports. Despite the difficult global economic situation, we still succeeded in reaching projected sales with net income of CHF 206.7 million (projection for 2020: CHF 190 to 210 million).

Dairy Ingredients acquires new markets with functional ingredients
The Dairy Ingredients division continued to make progress on the strategic development and marketing of value-creating products in the 2020 business year. In this context, we started building a whey competence centre at the Sulgen plant in autumn 2020 for the purpose of further refining whey as a raw material. This enables us to develop and produce high-quality whey-based functional ingredients for use in baby care and high-protein products. It also gives us the opportunity to replace the purchase of some important Baby Care ingredients with our own products and significantly increase internal value creation. We are also actively contributing to reducing food waste.

We have developed an innovative ingredient for sports nutrition and weight management, a vegan MCT powder made from medium-chain fatty acids, as well as lactose-free skimmed and whole milk powders and special protein mixtures for the production of high-protein yoghurts.

In addition, Dairy Ingredients gave its traditional brands LEDOR, NOVITTA and SUCREM a new look with updated logos and combined its whey-based products under the brand name WEYDOR. Functional, customised blends of whey and milk proteins are marketed under the name BLENDOR.

Discontinued areas

The sale of Uckermärker Milch GmbH at the end of February 2020 and Marbacher Ölmühle GmbH at the end of 2020 completed the realignment of the Dairy Ingredients division to focus on the Swiss production sites in Hochdorf and Sulgen.

The implementation of the whey competence centre in Sulgen is a key goal for the current business year. We also want to push ahead with the product innovations we have initiated in terms of whey and MCT powder. New customer solutions are also being pursued in the area of non-cow's milk and vegan products. To underline the breadth of our technological and application expertise, we decided to change the division name from Dairy Ingredients to "Food Solutions" as of the beginning of 2021.

We will continue to work intensively on various process optimisations in 2021. This work is extremely important in a competitive market environment. In particular, the milk market has been transformed from a buyer's market to a seller's market. For this reason, we will strengthen our relationships with our milk suppliers and promote our attractive product portfolio.

Projected sales for the "Food Solutions" division will depend most on the progression of the Covid-19 pandemic. Among other things, we are planning for slightly increasing volumes of roller dried milk powder for our premium chocolate customers and with increasing sales in the cream sector as well as for functional ingredients. Compared to the previous year, net sales revenue will be slightly lower due to the discontinuation of Uckermärker Milch GmbH and Marbacher Ölmühle GmbH.