Business model, strategy and markets
Corporate Strategy 2025 – Growth through "Smart Nutrition"
In its strategic focus up to 2025, HOCHDORF is seeking to position itself as the leading national and international Swiss authoritative brand for technically advanced specialist foods, in the "Smart Nutrition" segment. This is underlined by the new "HOCHDORF – Swiss Nutrition Solutions" brand identity. Advanced processing expertise for high-quality raw materials, state-of-the-art production technology and the market-focused nutrition expertise of its employees means that HOCHDORF stands out in the global market as a developer, manufacturer and marketing expert in specialist foods for people of all ages with specific nutritional needs. The portfolio offers solutions ranging from high-quality ingredients for the processing food industry to consumer products in the sensitive infant formula segment. HOCHDORF is well positioned in the international food sector in the context of global megatrends in the nutrition market and increasing demands on raw material and product quality.
HOCHDORF on the verge of change
Under the banner "Future 2030 - what does HOCHDORF stand for?", the Board of Directors and the Group Management worked with a group of around 20 employees on the future purpose of the company, its vision and mission, and its corporate values. The results of this process represent the fundamental values for the future orientation and development of HOCHDORF. We are more than just a dairy processor. Our technologically advanced ingredients and speciality foods are relevant to a growing number of consumers across all age groups worldwide.
In the second half of the year, the new Board of Directors and Group Management in place since mid-2020 focused on stabilising the company and shaping its future. After several turbulent years, the management deliberately prioritised securing a solid foundation for attractive growth prospects, honing the corporate strategy to focus on effective and efficient service provision in our core business. In line with this, the company divested areas outside the core business and drove forward its concentration on core competencies. The Board of Directors and Group Management discussed and sharpened the detailed strategies developed in the business units and departments to achieve these targets. The strategy and the organisational model were approved by the Board of Directors at the beginning of December 2020.
"ONE HOCHDORF" – the guiding principle for our corporate identity
The Group Management adapted the corporate structure under the banner of "ONE HOCHDORF" with the aim of strengthening corporate culture, identity and attractiveness as an employer, while at the same time promoting a consistent, company-wide sharpened focus on the customer, market and brand view. We expect the new market and customer-oriented organisational structure, supported by competent service areas, to increase effectiveness and efficiency in market development. In short, we want to make HOCHDORF more agile, innovative and service-oriented to inspire our customers and employees even more for HOCHDORF.
Creating value through strong brands
As part of the strategy development process, the Board of Directors and Group Management developed an umbrella brand concept that clearly positions the company and its brands in the market. Food Solutions (formerly Dairy Ingredients) and Baby Care – both own brands and private label business – are now part of the new umbrella brand "HOCHDORF - Swiss Nutrition Solutions". This umbrella brand clearly points to our Swiss origin and communicates to partners and customers the high quality standards of our products, based on our nutrition technology expertise and reliable access to high-quality raw materials.
In recent years, the food market has shown strong global growth in functional specialist foods that are geared to the specific needs of defined target groups. This development is based on a more conscious approach to nature and food, the worldwide phenomenon of malnutrition and increased standards in the baby care segment. The production of these "Smart Nutrition" products requires sound knowledge of nutritional physiology, a distinct understanding of customer and consumer needs as well as resilient technological competence for the careful processing of high-quality raw materials. HOCHDORF is thus well positioned in the market for "Smart Nutrition".
Meeting the exceptionally high standards of our demanding private label/B2B customers with high-quality special products in the Baby Care segment will remain our most important growth area in the coming years. HOCHDORF will continue to grow with existing customers in 2021 and will also develop new customers in both the brand and the important private label segment in Latin America, Europe, the Middle East and Africa, as well as Asia. Furthermore, HOCHDORF will use its strong Swiss position for targeted expansion of its own brand business internationally, to exploit synergies and strengthen our B2C expertise.
We are currently developing innovative formulations for babies and children with specific nutritional needs. We want to capitalise on our newly developed product concepts such as our infant formula based on goat milk – using them for our own brands but also placing these with our business customers. We are also working on expanding our organic baby milk portfolio, which will open up interesting niche segments with above-average margin potential. At the same time, we are laying the technical processing foundations to be able to respond more flexibly to individual customer needs. We also plan to expand our range of semi-finished products, known as base powders, for industrial customers. The innovation of new product solutions for our business customers and our end consumers is therefore a key growth driver for the years ahead.
To ensure success in the various growth areas, we have formed three sales units: Bimbosan Switzerland, Own Brands International and Private Label. We also plan to strengthen our competencies in end consumer marketing and brand management for the growth of our own brand business with Bimbosan and Babina. We will continue to expand our staffing in national and international sales and are also investing in sales through online channels worldwide. We aim to enter at least two new markets with our own brands in 2021.
In Food Solutions, our premium chocolate customers provide an important basis and we are working closely with our partners and supporting them with new developments. The market potential and margin development in this segment have to be examined continuously and carefully. We will also develop a stronger position in the development and marketing of high-quality whey-based and plant-based ingredients especially for our own use in Baby Care.
Launching our whey competence centre in Sulgen and further advancements in product innovations are key goals for the current business year.
Functional strategies to support successful business development
In terms of milk procurement and agricultural policy, our strategic action plan will further improve the international competitiveness of Swiss milk. For future growth, it is important to ensure sufficient milk and whey supplies and to highlight the advantages of Swiss milk more clearly.
In our production and supply chain, we want to make a significant contribution to greater added value and improved customer satisfaction by increasing the utilisation of production capacities and optimising supply chains. Our "Operational Excellence Programme" is one way of achieving this. In the future, we will also work more closely with our partners in the supply chain to continuously improve our quality and service to meet customer demand.
The Quality and Food Safety Department aims to ensure the highest level of food safety at all times and to anchor this understanding even more broadly and deeply in the company. Quality assurance will thus underpin the "Operational Excellence Programme". In tandem with this, we want to better prepare the entire workforce for future challenges and expand their competences.
In the area of research and development, a new departmental structure with a focus on product and process development makes it possible to cover the diverse requirements close to the market more effectively, use synergies, create added value and connect interfaces. Innovation is a key growth driver for both business units. We are investing in establishing an interdepartmental China competence team to strengthen our knowledge and skills in this strategic growth area.
In relation to finance and controlling, we want to make all financial processes more efficient and enable more transparent reporting for controlling. At the same time, we aim to optimise liquidity management and raise awareness of compliance and corporate governance issues.
Our IT department is working on further digitising our processes and the way we work together within the company and with our customers and partners. In view of the sharp increase in cyber attacks, we are also paying additional attention to HOCHDORF's IT security status.
Our HR department is focussing on positioning the HOCHDORF Group as an attractive employer both internally and externally. Our aim here is to attract, retain and develop qualified and motivated employees. We want to involve our employees more closely and make them "stakeholders". Each employee will individually formulate the corporate values in concrete terms for their own workplace, for instance.
Our risk management identifies business risks, includes them in the individual strategy fields and addresses them with concrete measures.
As part of its future strategy development, the Board of Directors and Group have jointly agreed to intensify HOCHDORF's sustainability efforts. This will include creating a long-term sustainability strategy with new ambitious targets and measures along the value chain by the end of 2021. In addition to the topics already under consideration, this will also address the action areas of sustainable milk and animal welfare, climate and greenhouse gas emissions, waste prevention and water consumption.
Strategic foundations established for the future
The operating environment did not become easier in 2020. The intensity of competition increased and the impact of the COVID-19 pandemic is strongly influencing raw material availability and supply chain collateral, as well as on our customers' sales and growth. The Swiss chocolate industry struggled with a significant drop in demand in 2020, both domestically and abroad, due to the pandemic; it is likely to take several years to recover to pre-pandemic sales levels. In the infant formula sector, we are challenged with constantly growing regulatory requirements, declining birth rates in China for several years and overcapacities in the market. In contrast, the global change in nutritional habits and demand for high-quality and technically sophisticated specialist foods – or "Smart Nutrition" – offers interesting growth opportunities with above-average added value for a company like HOCHDORF, with its strong and agile development and technology competence. We see market opportunities here in the "Smart Nutrition" niche for specialist foods with a high functional added value for our industrial customers and consumers. We are well equipped to meet these future challenges.