FrieslandCampina to offload German dairy operations, zeroing in on high-performing Chocomel and Valess

15 Jun 2022 --- As ongoing inflation pressures the global food sector, dairy giant FrieslandCampina has revealed plans to sell parts of its German consumer business to Theo Müller, while narrowing focus on its best performing international cheese and milk businesses.

This transaction includes, among others, the Landliebe dairy brand and three German production facilities. Financial terms of the deal have not been revealed.

Dutch FrieslandCampina will pivot its focus toward growing its international brands like chocolate milk Chocomel and plant-based meat alternatives under Valess, its Professional business, and some private label brands produced abroad in Germany.

“Muller offers more scale for our business and in the competitive German market that’s an important thing to do,” Jan-Willem ter Avest, director of corporate media relations at FrieslandCampina, tells FoodIngredientsFirst.

The transaction is expected to be completed before the end of 2022 (Credit: Landliebe).“Market conditions, especially inflation, played a role in the decision. When Müller’s offer came, we thought this might be a good opportunity for these brands to grow and for us to focus on our international brands, more than we did in the past.”

“These are international brands that are performing very well. In the case of Chocomel, sales are going up so we have potential for it in Germany,” Ter Avest adds.

The transaction is expected to be completed before the end of 2022.

Scope of transaction
FrieslandCampina’s proposed transaction comprises the business activities of the brands Landliebe, Tuffi, Südmilch, Puddis, Mondelice, various private labels in the white dairy range produced by FrieslandCampina in Germany and the foodservice brand Gastro.

It also encompasses FrieslandCampina’s German production facilities, warehouses and distribution centers in Heilbronn, Cologne and Schefflenz.

FrieslandCampina Germany will focus on the marketing and sales of its international brands Valess, Chocomel, its cheese brands – including Frico and Holland Master – and private labels produced by FrieslandCampina outside Germany, including cheese and cream spray cans. 

Additionally, FrieslandCampina will maintain its presence with creamers and savory ingredients brand Kievit in Lippstadt, as well as with nutraceutical company DFE Pharma in Goch and Nörten-Hardenberg.

“We are convinced that this acquisition will be highly complementary to our successful dairy portfolio on the German market and will make a positive contribution to the growth course of Unternehmensgruppe Theo Müller,” comments Stefan Müller, chairman of the Supervisory Board of Unternehmensgruppe Theo Müller.

The transaction is subject to customary closing conditions, including approval by the Members’ Council of Zuivelcoöperatie FrieslandCampina and the German competition authorities.

FrieslandCampina will narrow its focus on growing international brands such as alt-meat producer Valess (Credit: Valess).The Member Council will decide on the proposed transaction on 20 June 2022.

FrieslandCampina Germany’s approximately 1,000 employees were informed of the intended sale today.

Farmer impact
Following the transaction, FrieslandCampina will continue to collect and process the milk from its German member dairy farmers.

For the German member dairy farmers, all rights and obligations associated with membership of the cooperative remain unchanged, the company assures.

They will also continue to be entitled to the FrieslandCampina guaranteed price, the supplementary cash payment, allocation of profit to the general reserves and, if applicable, any supplementary payments.

The new owner will take over the supplier contracts of the German non-member dairy farmers.

Performance overview
In February, FrieslandCampina reported strong revenues and operating profits, according to its latest annual report for the year ended 2021. The dairy giant’s F&B business group performed well over the whole year, with revenues up by 4.3% to €7.9 billion (US$8.9 billion). 

The company’s ingredients business moved into the plant-based protein arena last year with two new powder solutions developed with AGT Foods, a supplier of value-added pulses, staple foods and ingredients. 

Most recently, FrieslandCampina Ingredients introduced the “highest purity” prebiotic Biotis GOS-OP High Purity within its Biotis portfolio for adult gut and brain health, in addition to the company’s infant nutrition solutions.

“The market position and results of FrieslandCampina Germany have improved significantly in recent years through targeted measures,” comments member of Royal FrieslandCampina’s executive board and president of FrieslandCampina Food & Beverage, Roel van Neerbos.

“Nevertheless, we are convinced that in the new owner, the Unternehmensgruppe Theo Müller, we have found a suitable successor who, through synergy benefits, will be able to further develop this company successfully. FrieslandCampina will continue to focus on selling its strong international brands in Germany which is one of our home markets.”

By Benjamin Ferrer