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The First Choice. for Always. Resource-Conserving, Vegetarian, Protein-Rich, Inspirational – Food Is Becoming More and More of an Ideology

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The First Choice. for Always. Resource-Conserving, Vegetarian, Protein-Rich, Inspirational – Food Is Becoming More and More of an Ideology The first choice. For always. Resource-conserving, vegetarian, protein-rich, inspirational – food is becoming more and more of an ideology. A healthy, balanced lifestyle is the new norm, and morphing from a desirable state to a lifestyle. At DMK, we develop new concepts and products that respond to consumer’s desires and help them to lead a balanced life. As a leading food manufacture, we adopt a clear customer and market orientation so as to offer dairy products to suit everyone. OUR ROOTS. OUR VALUES. OUR FUTURE. 5 The first choice. For always. As a modern cooperative, we are on our goal of being the first choice for dairy well positioned to offer a sustaina- products of natural origin for consumers in every phase of their lives. ble and innovative product port- folio: from the farm to the consu- We have successful brands Brands such as MILRAM, Oldenburger, mer’s table. Humana, Alete and Uniekaas give consumers We are DMK in Germany and abroad enormous confidence At DMK, more than 14,000 people live pas- in us. We are an established name in our Eu- sionately for milk every day. We are Germa- ropean home market and selected target mar- ny’s largest dairy cooperative and one of kets around the globe. We build constantly on the most important suppliers to Germany’s the position we have earned in the different retail food sector. Our farmers, their families B2C and B2B markets. With the help of our and our employees work together to enable own targeted trend management and a deep us to produce top-quality food at more than understanding of customers and consumers, 20 sites, processing around 8 billion kilos of gained over a number of decades, we con- milk every year. Our product portfolio ranges stantly adapt our portfolio to changing needs from baby food, cheese, fresh dairy products in a highly dynamic environment. From baby and ice cream to ingredients, and stands for food to cheese to whey – we know how to get quality, diversity and innovation. As a mod- the best out of our milk and use every one of ern food manufacturer, we look beyond the its valuable, natural elements. We combine raw milk alone: our top priority is to focus in our many years of expertise with intensive re- everything we do on what consumers need search and development so as to manufacture and what they expect from our products. innovative, delicious products at our modern This enables us not only to meet these needs factories. We are driven by a desire to achieve and expectations, but to keep improving fur- the best possible value added for our custom- ther. We therefore work together every day ers and our company. OUR ROOTS. OUR VALUES. OUR FUTURE. 7 We take responsibility We are a strong community We are conscious of our responsibility for We are a company owned by farmers, and our products, from the meadow to the the cooperative structure is deeply embed- consumer’s shopping bag. We use nature’s ded in our corporate core. We are a commu- resources to optimum effect and select our nity that stands for self-management, com- ingredients with the greatest care. We ad- munal spirit, mutual support and continuity dress socially and politically relevant topics as well as a shared readiness to be flexible such as sugar reduction, packaging, animal and to change. We are taking the heritage welfare and sustainable feed and contribute of the cooperative model into the future by actively towards solutions. With our sustain- developing it continuously and designing our ability strategy and the Milkmaster Pro- relationship with our members in a modern gramme, we improve sustainability in dairy way. We therefore attach great importance to farming holistically and involve various spe- intense dialogue within the cooperative and cialist departments across the company in a strong “we” feeling among dairy farmers implementing this mission. We see sustaina- and employees.This base enables us to act ble business activities as the prerequisite for as a unified whole to develop our company a good, natural portfolio and products with actively and go on making our vision for the a pure, unadulterated milk flavour – and also future a reality. as our responsibility towards consumers, employees and our dairy farmers. Vision Mission Values The first choice for dairy products of natural origins – for always. We use nature’s resources to We see ourselves as a preferred partner with a Our three core values continue to apply: optimum effect and select ingredients with the greatest care. Dairy products comprise the major deep understanding of customers and consum- we are fair, innovative - and entrepreneurial share of our portfolio and form the basis of our product range. Our goal is to be with consumers in ers. In this context, we create maximum value in our actions. every phase of their lives. Our mission is to fulfil the wishes of customers and consumers. and embrace our sustainable responsibility. 9 “Focus on the consumer” CEO Ingo Müller talks about the The rapid movements in the market are a major challenge for our entire industry and past fiscal year – and about the determine around two thirds of our perfor- DMK Group's future course. mance. That will not change. As an enterprise, we therefore concentrate mainly on the remain- Looking at this combined annual report and ing third, so as to earn a profit that allows us to sustainability report – how satisfied can you pay our dairy farmers competitive milk prices be with the year 2018? and to make essential investments. And that's We’ve mastered major internal challenges in not a one-off task, we have to make permanent a difficult market environment and earned a efforts to move forward. solid profit at the previous year’s level. Today, DMK is in a stable position, well financed We also mastered the demands on us well in the and in a position for targeted growth, mov- year under review - constantly rising require- ing forward in accordance with the strategy. ments, particularly in sustainability issues, such This indicates to me that we've taken the right as sugar reduction, packaging, animal welfare course and that the combined efforts of our and sustainable feedstuffs. In this regard, we’re 14,000-plus employees and dairy farmers are positioned to help transform the industry even worthwhile. beyond our own corporate boundaries with our DMK 2020 sustainability strategy, the prelimi- After a favourable prior year for the dairy nary work on the realignment of our Milkmas- industry, the market took a more difficult ter Programme and a wide range of initiatives. turn in 2018... We also took the initiative in 2018 at the higher, INTERVIEW WITH THE CEO 11 sectoral level for that purpose, and suggested That’s correct, and these resignations tendered process. However, our corporate culture also the idea of a joint sector strategy for the entire in the year 2016 were a clear sign of discon- “We are needs to change in order to achieve this goal. dairy industry. Politicians and professional asso- tent, which we took on board. Since then, we In concrete terms, we have to learn to change ciations welcomed this thought. have successfully redesigned our company and our way of thinking, cast off former blinkers, the remaining dairy farmers are also benefit- positioning go new ways and, above all, pull together in When we look at our own performance, it is ing from the progress made to date. In other the same direction. also true to say that we are not happy with the words: if resignations are an expression of dis- ourselves as milk price paid to our farmers in connection satisfaction, the fact that we’re welcoming new That sounds good in abstract terms, but what with our business results in 2018. The level of farmers to DMK again now can be counted as a modern food exactly do you mean by setting a trend? the payments was lower across the industry as approbation. When we take it easy in times of rapid change, a whole in 2018 than in the prior year because we stand still. Whether it’s the impact of dig- of the market situation. In this environment, For us as an enterprise, these resignations manufacturer” itisation, which is bringing new players onto we only achieved a farm-gate milk price in the were also an opportunity, which we mas- the food market, or consumers’ changing mid-range for Germany - this is not what we tered well operationally and will continue demands, which are shifting towards conven- aspire to. We continue to see our tasks here as to use to our advantage in the near future: ience, sustainability or functional food – we follows: we are engaged in a complex change the portfolio that we streamlined for some If I say “everything”, it’ll sound like an exag- have to consider consumers’ wishes deeply all process and the investments we have made in countries, customers and factories comes geration. However, it’s a perfectly accurate the time and work today on the products they the market have not yet led to the expected mainly from the not-so-profitable commodity description of the impression I have when will want to buy tomorrow. results at all points. However, we’re already segment and, what’s more, would have made I consider today a company that has had a seeing significant progress. For this reason, little contribution to our value added in the radical makeover in the last two years: we’ve We managed to do that well in many areas last established a new organisational structure, year: not least, our structured, DMK-specific we’re overhauling our portfolio, setting up trend management with external and inter- new processes, implementing a new corporate nal trend scouts is demonstrating attractive culture and, above all, we’ve shed our under- new product opportunities.
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