route2020 strategy: sustainable growth and value creation

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

In 2015 FrieslandCampina’s route2020 strategy was updated based on developments in the world, in dairy farming and within FrieslandCampina.

Purpose statement: nourishing by nature

Better nutrition for the world

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 billion people in 2050. This, together with the increase in wealth, will result in an increased demand for food. FrieslandCampina can, with its dairy products, 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.

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.

Now and for generations to come

FrieslandCampina focuses on future generations. This is why FrieslandCampina invests in sustainable long-term growth and 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 and fossil fuels.

Aspiration

In the context of updating its strategy FrieslandCampina has formulated the following long-term aspiration:

  • achieve around 5% annual volume growth in the selected priority product market combinations;
  • process and valorise efficiently around 10 billion kilos of milk from the member dairy farmers in product market combinations that add the most value;
  • grow to 15 billion euro revenue in 2020;
  • 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 is striving to generate more value from the milk supplied by focusing on combinations of main products and by-products that deliver the most value. The expected increase in the volume of milk in the coming years demands more efforts aimed at improving the result from the least profitable billions of kilos of milk because, without additional measures, both the volume and the price fluctuations (volatility) of this group of basic products will increase.

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

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

In the updated 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 number of specific product market combinations. The following factors determined the choice of markets:

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

  • the expansion of the leading positions in growth areas;
  • the protection of the volumes in home markets;
  • the development of new product market combinations to build future markets.

Highly engaged, capable people who work effectively together

FrieslandCampina’s highly engaged and capable employees are the foundations on which FrieslandCampina’s success has been built. Worldwide there is a strong feeling of mutual involvement. In view of the developments around and within the organisation, considerable attention will be paid to the continuous improvement of capabilities and ways of working. The primary aim of the strategy is the optimisation of the sales processes for success in the market, efficient processes and ways 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 execution 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, whereby proactive coordination, clear responsibilities and fast and result-oriented action are key;
  • continuing to work on improving product quality and employee safety;
  • applying principles of good business conduct in line with the Compass code of conduct, which is based on the principles of integrity, respect and transparency.