route2020 strategy: sustainable growth and value creation

Providing the growing world population with the right nutrients is the key challenge in the coming decades. By offering trustworthy, relevant and nourishing dairy products, FrieslandCampina is contributing towards safeguarding food and nutrient security. FrieslandCampina’s purpose – nourishing by nature – stands for better nutrition for the world’s consumers, a good living for our farmers, now and for generations to come.

Purpose: nourishing by nature

Better nutrition

The global population is expected to grow from 7.4 billion people in 2015 to 8.5 billion people in 2030 and more than 9.7 billion people in 2050. This, together with the increase in wealth, will result in an increased demand for food. With its dairy products FrieslandCampina can contribute towards feeding the world’s population. FrieslandCampina will focus on improving its products’ recipes and on ensuring dairy products remain affordable and thus relevant for all income groups. This is in line with the United Nations’ Sustainable Development Goal ‘Zero Hunger – End hunger, achieve food security and improved nutrition and promote sustainable agriculture’ (SDG 2).

A good living for our farmers

FrieslandCampina’s goal is to add as much value as possible to the milk to be able to make the maximum contribution towards the incomes and continuity of many generations of dairy farmers. FrieslandCampina strives to pay out one of the highest milk prices in Northwest Europe. By doing so FrieslandCampina remains an attractive company for the member dairy farmers. In a number of countries in Asia, Africa and Eastern Europe FrieslandCampina offers local dairy farmers assistance with improving their farm management and milk quality. This is in line with the Sustainable Development Goal ‘Decent Work and Economic Growth – Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’ (SDG 8).

Now and for generations to come

FrieslandCampina focuses on future generations. This is why FrieslandCampina invests in sustainable long-term growth and in the financial health of the Company and the Cooperative. The aim is to achieve climate-neutral growth and reduce the use of scarce natural resources such as water, raw materials and fossil fuels. This is in line with the Sustainable Development Goals ‘Responsible Consumption and Production – Ensure sustainable consumption and production patterns.’ (SDG 12) and ‘Climate Action – Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy’ (SDG 13).

Aspiration

FrieslandCampina’s long-term aspirations are:

  • to achieve around 5% annual volume growth up to 2020 in the selected priority product-market combinations;
  • to efficiently process and valorise around 10 billion kilos of milk from the member dairy farmers;
  • to grow to 15 billion euros in revenue in 2020;
  • to be financially healthy and in harmony with nature and society in the short term and in 20 years’ time in order to also create value for the following generations of dairy farmers.

Leverage the Dutch dairy heritage and unique milk chain

During its 140 years’ history FrieslandCampina has built up strong market and brand positions based on recognisable brands and differentiating quality. The unique Dutch milk chain is a valuable tool for continuing to bind customers and consumers to FrieslandCampina’s products and brands. Frisian Flag, Dutch Lady, Peak, Campina, Chocomel and Frico are examples of brands that have existed for generations. FrieslandCampina wants to increase worldwide consumer demand for Dutch dairy products, including through the from grass to glass concept and by investing even more in the appeal of Dutch dairy, in part by keeping cows visible in the Dutch landscape.

Generate the maximum value from milk

FrieslandCampina aims to generate more value from the milk supplied by focusing on combinations of main products and by-products that deliver the most value. This requires more effort over the coming years, aimed at improving the result from the least profitable billions of kilos of milk.

To remain attractive to both customers and consumers, FrieslandCampina must offer high-quality, safe and sustainable products. The production and processing of raw milk must therefore continue to meet the increasing demands of both the market and society in terms of quality, safety, sustainability and transparency.

Focus on those markets that generate the most growth, profit and valorisation of member milk

In the route2020 strategy, choices have been made in order to utilise capital, production capacity and employees in such a way that long-term and sustainable value is created for the member dairy farmers and society.

FrieslandCampina is active in many markets with a wide range of products. Every market situation is different and FrieslandCampina will focus on a limited number of specific product-market combinations. The selection of product-market combinations is based on the following key factors:

  • market growth: expected growth of the market in combination with FrieslandCampina’s ability to grow in this market;
  • profitability: the possibility of achieving profit in the product-market combination;
  • member milk valorisation: the degree to which the product contributes towards the processing of member milk while also generating profit.

Based on the above criteria, three groups of product-market combinations have been selected on which FrieslandCampina will focus:

  • expanding leading positions in growth markets;
  • protecting the volume in the home markets;
  • developing future markets.

Highly engaged, capable people in effective collaboration

FrieslandCampina has highly engaged and capable employees. They are the foundation of FrieslandCampina’s success. Worldwide there is a strong feeling of mutual involvement. Considerable attention is being paid to the continuous improvement of skills and ways of working. The primary aim of the strategy is to optimise sales processes for success in the market, the efficiency of processes and the way of working. A number of focal areas are important for the successful roll-out of the updated route2020 strategy:

  • improving the capabilities that are key for market success, including through innovation, commercial performance and further digitalisation;
  • reducing costs to enable investments in growth, for example through supply chain and overhead efficiencies;
  • AAA (Alignment, Accountability and Action): ensuring all employees think and act in accordance with the AAA concept, in which proactive coordination, clear responsibilities and fast and result-oriented action are key;
  • continuously working on improving the quality of the products and the safety of the employees;
  • ensuring good business conduct in line with the Compass code of conduct, based on the principles of integrity, respect and transparency.