FrieslandCampina CEO: “We Are Still Just Scratching the Surface of the Nutritional Potential of Milk”

25 Jun 2015 --- New FrieslandCampina CEO Roelof Joosten believes that the dairy industry needs to be more proactive in how it communicates with consumers and that we are still just scratching the surface of the nutritional potential of dairy. Changing opinions around the nutritional benefits of full fat dairy products should be used to change some “wrong and inaccurate” consumer perceptions.

“We are still just scratching the surface of the nutritional potential of milk. There is still a lot to be developed and I think the industry has been relatively conservative in focus. I think we should focus far more on the consumer as there are some clear opportunities there. If we listen to them well, we can truly develop some unique concepts that can add value,” Joosten told FoodIngredientsFirst in an exclusive interview following his keynote address at the Global Dairy Congress in Amsterdam yesterday. “That is on the basis of ingredients from a business to business perspective, but moreover as a total product perspective towards the consumer in helping them to give them a healthy diet and protecting them from diseases.”

In his first speech since taking the position on June 1, 2015, he stressed: “In the past there was no doubt about how important and nutritious full fat milk and dairy products were and how they contributed to a healthy and balanced diet. The challenge now is to inform consumers correctly and transparently about milk’s role in a natural and healthy balanced diet.”

Joosten took over as Chief Executive Officer of Royal FrieslandCampina at a time in which the European dairy industry is going through a period of key challenges and opportunities, as the Russian sanctions are extended, at the same time that huge volumes of milk come on stream following the end of milk quotas on April 1, 2015. 

This week, following the announcement that the EU is to extend its sanctions on Russia in relation to the Ukraine crisis, Russia has announced that it will retaliate by extending its ban on Western imports, including fruit, vegetables, meat, poultry, fish, milk and dairy, for another six month period.

Joosten is not hopeful of a quick resolution to the Russian situation, which has already had huge financial implications for the company. “When the ban was announced and we had to deal with it, it costed us roughly €60 million directly and indirectly during 2014. The indirect effect comes about as a result of having to sell the milk elsewhere, which affects pricing. We are monitoring the situation and it doesn’t look like it will be quickly resolved. And even if that were the case, it would take some time before the whole situation is restored, if ever. So I think it will be very difficult to ever be back at the levels we had before,” he noted.

Dairy suppliers around Europe are making plans for expansion and increased production now that milk quotas imposed some 30 years ago were lifted on April 1, 2015. FrieslandCampina, which effectively represents the Dutch export of dairy products, has been preparing for the opportunity to double in exports in the wake of the milk quota abolishment. In total the company estimates that the supply in North West Europe will now increase by 20%. All of the surplus will come from export markets. 

What then to do with all the additional milk that cannot go to Russia? “You will have to find different markets then. We need to be very agile as an industry and move quickly to ensure that you can still take advantage of market opportunities and don’t focus on the less good things in the market like Russia,” he adds.

A major focus for the company has been China, where European dairy companies have benefited greatly from the positive image of western brands, as local brands have struggled with an image problem in the wake of the melamine scandal. This has also led to the mass smuggling and of infant formula [including large scale theft] from countries such as the Netherlands into China. “Smuggling of products is awful. That people take advantage of that situation is not good for the industry over all,” Joosten stressed. 

But Joosten also noted the opportunity that China presents. “In the Netherlands, consumers take in 450 kilos of milk a year, in China they still only consume an average of around 25 kilos. If we could get the Chinese up to the Dutch level I think we have a brilliant future,” he quipped in his speech.

He noted that there is still a major role to play in supplying Chinese consumers who have specific needs. “We are working on it already through taking our Friso brand products directly into China. And we are working on concepts together with the Chinese government to help with additional types of products. We don’t have a consumer product for infant formula in the Netherlands, we just launched one into the pharmaceutical channel and that might be an opportunity to build further for China,” he told FoodIngredientsFirst.

But Joosten’s key message was the need for a more holistic approach to dairy. In his speech he noted: “In the case of saturated fat in relation to healthy hearts FrieslandCampina has been seeing some interesting recent developments in the research space. In the past there has been a lot of focus on single nutrients such as saturated fat and biomarkers such as cholesterol. Milk fat is not the same as saturated fat and not all saturated fats influence cholesterol markers. Recent developments show that we need to look at the total food instead of single nutrients present in the food. In other words, you need to look at milk in its entirety rather than just as a saturated fat.”

Key platforms for growth through nutrition will include infant formula, sports nutrition and healthy aging, with the protein trend creating a clear opportunity. 

“I think there is now a trend on proteins for a wide range of consumers. The most recent one are seniors, who are in need of muscle strength. But that muscle strength position can also be taken into sports. I think there is a big opportunity for the dairy industry to further develop the protein base,” Joosten noted. “We are working on it and are currently introducing in Hong Kong and later in China products that are targeted at the over 40, over 50 and over 60 age groups. So I think that is a really interesting proposition and we are looking to further build on it,” he revealed.

But he stressed that the benefits of dairy can be marketed to all demographic groups. “You have infant nutrition, sports nutrition and elderly nutrition – so you have the whole range. I think it is a great opportunity for the dairy industry to benefit from that part,” he noted, stressing that the FAO and WHO recently announced that the ideal diet is based on fruit, vegetables and dairy. 

Another area of development for the company will be reformulation to reduce the sugar and salt content of products. “A lot of dairy products are simply too salty and too sweet. So at the end of the day the consumer has a product with less salt and less sweetness, but with a similar experience and taste,” he noted.

Finally, another big story with major relevance for manufacturers with a significant Benelux presence is the merger of Ahold and Delhaize, to create an enormous player on the global retail stage. Joosten said that his company will first have to see how this merger will evolve and then adapt to that new situation. “Ahold and Delhaize are both customers. You now have one customer and in theory you will put one face to our company for our customer and we will have to see how that will evolve,” he concluded.

By Robin Wyers