Technology and innovation competence: positive market reactions
The targeted communication around HOCHDORF's technological expertise and its significantly increased focus on market-oriented innovations in the first half of 2022 have created positive feedback from the market. Exploratory talks for technology partnerships in the area of whey protein concentrate or for products based on alternative proteins have begun with various industrial partners and start-ups in Switzerland and Europe, with discussions on initial development concepts. A cooperation for the contract manufacturing of milk- and plant-based powder ingredients was agreed with a renowned Swiss manufacturer.
Launch of goat milk powder in high-quality packaging
In producing the first goat milk powder in Switzerland, manufacturer Blüemlisberg AG has been relying on HOCHDORF's drying expertise since 2021. A close collaboration created the concept of up-market packaging in the classic Blüemlisberg design – devised and manufactured by HOCHDORF. The matt white can has been well received in the market. It represents a typical development of HOCHDORF's “Smart Nutrition” strategy, which uses cross-divisional and innovative synergies between the Food Solutions and Baby Care teams to find the best solution for customers.
Food Solutions and Food Specialities: increased sales
Of the net sales revenue of CHF 145.7 million in the first half of 2022, CHF 118.3 million, or 81.2 per cent, were generated by the Food Solutions division. This is 5.2 per cent more than in the first half of 2021, whereby low-margin sales from by-products such as cream have declined significantly. The share of our Smart Nutrition products – which require a high level of technical expertise and are produced on the basis of cow's milk or alternative proteins – is steadily increasing. As planned, lower-margin processed products such as cream and skimmed milk powder have a declining share of sales.
Growing demand and rising raw material and milk prices
The first half of 2022 was characterised by rising raw material prices and a shortage of milk. As detailed in the Letter to the Shareholders, the global economic situation combined with the rising milk price had a significant impact on costs in the Food Solutions division. Lactose-free milk and whey powders enjoyed increased demand in the first half of 2022. Milk powder purchases from the Swiss chocolate industry returned to the pleasing pre-pandemic level in the first half of the year.
Whey Competence Centre
Over the past year, HOCHDORF has consistently pursued its chosen path of increasing its own added value, relying on the use of Swiss raw materials as part of this strategy. For some time now, the company's own lactose has been the main ingredient in its infant formula products. Since this year, we have also used our own whey protein concentrate for infant formula from our own and white-label brands – adding an extra “Swissness” factor. The Whey Competence Centre in Sulgen continued to develop well in the first half of 2022. Up to now, whey was primarily seen in the market as a by-product of cheese production. For HOCHDORF, it is a valuable raw material with high refinement potential. Demand for Swiss whey protein is increasing from manufacturers of sports and supplementary food products. HOCHDORF is one of the few manufacturers to refine Swiss whey in Switzerland, creating a product that captures the zeitgeist in the current high-protein health and fitness sector of lifestyle nutrition.
Outlook
In Food Solutions and Food Specialities, we are continuing to transform from a volume-oriented milk processor to a high-margin milk refiner. Alongside interdepartmental Baby Care initiatives, we are concentrating specifically on the development and marketing of special milk and whey products with added benefits, such as lactose-free milk powder, milk or whey powder concentrate, and the market opportunities for products based on alternative proteins, such as vegan milk powder substitutes. We aim to prioritise the scarce raw material of milk for sustainable high-margin products. Internally, we are strengthening the cooperation between our departments to expand our Smart Nutrition competence across all products with a market-oriented approach.
Together with our customers, we are shaping the future of the food industry – with our finger on the pulse and an awareness of the nutritional trends of tomorrow.
As well as traditional milk-based products such as classic milk powder, the Food Solutions and Food Specialities divisions also include innovative semi-finished products like high-fat powder for specialist nutrition or vegan milk powder for chocolate production. HOCHDORF's key area of expertise is the gentle concentration and drying of milk and milk powder substitutes. In addition to milk, whey and fat powders, we also produce condensed milk and cream for internationally renowned brands and supply important ingredients for the production of milk chocolate, yoghurts or ice cream and other convenience products for the food industry. The HOCHDORF Group's strongest revenue field is evolving as it develops from a volume-based business model to create a speciality portfolio of the most sophisticated functional ingredients – those with a specific nutritional or application-related additional benefit – which require specialist food technology expertise to produce.