Interview Kees Gillen
'Continue to emphasize the good qualities of milk'
More than 10 years ago, he was one of the architects of the merger between Campina and Friesland Foods. Kees Gielen is now the CFO and COO of the French dairy cooperative Sodiaal and he is once again performing 'the trick'. And he warns against the rise of vegan. “As a dairy industry, we have to find good solutions for that.”
The Notre Dame. The fire in the iconic church in the heart of Paris in the spring of 2019 made a deep impression on Kees Gielen. He was there. He cycled there from his apartment in the French capital. “Very impressive to see such an important world monument on fire. People around me were crying.” Since the summer of 2018, Paris has been Gielen's workplace as Chief Financial Officer (CFO) and Chief Operational Officer (COO) at the French dairy cooperative Sodiaal.
| Kees Gillen |
| Before Kees Gielen joined Campina in 2006 as financial director (CFO) he had already made a career at Unilever, Hero and Sara Lee, among others. He made it to senior vice president at the American food giant. In 2008, Gielen became an interim CEO at Campina. He replaced CEO Tiny Sanders, who had to make way for the merger of Campina with Friesland Foods. Together with other leading players such as Sybren Attema and Kees Wantenaar, Gielen turned out to be one of the pacesetters behind the merger process. Together with CEO Cees 't Hart, Gielen, as CFO of FrieslandCampina, implemented the integration process of the merger cooperative from 2009 onwards. In 2014 he stepped down as CFO to be responsible for Business Development at FrieslandCampina for a year. He then joined the Supervisory Board of Sodiaal in 2016 and was also director of the currency trading company the Nederlandsche Payment and Exchange Company for a year and a half. In June 2018, Gielen exchanged the Supervisory Board of Sodiaal for the dual function of CFO and COO of the French dairy group. |
Sodiaal is, somewhat broadly, the French equivalent of FrieslandCampina. The cooperative has around 11.000 member dairy farms, 70 production locations throughout France and is active in cheese, basic dairy products such as butter, cream and powders, dairy ingredients, fresh dairy and organic dairy. “And just like at FrieslandCampina, our milk price sets the standard in the French dairy industry,” says Gielen, sitting in his beautiful home in the province of Utrecht. From there, he commutes weekly back and forth to his apartment and the head office in Paris.
For Gielen, Sodiaal is a return to cooperative structures. An area in which the driver feels perfectly at home. He is experienced in this, because ten years ago Gielen was one of the initiators of the merger between Friesland Foods and Campina. First as interim CEO of Campina in 2008. After the merger in 2009, Gielen was the CFO of FrieslandCampina for another 6 years under the then CEO Cees 't Hart. Because of their no-nonsense approach and transparent policy, 't Hart and Gielen were able to break a sweat with the members. “A great time”, Gielen looks back on that period. “We were in a very positive flow at the time, where everyone released a lot of energy to tackle new things. Someone like 't Hart was important to the success of the merger, but hundreds of others also made a substantial contribution to it.”
Execute new strategy
With Sodiaal, Gielen is now once again performing 'the trick', as he describes it himself. The French dairy group presented a new strategy at the end of 2017, which includes saving around €2025 million until 150 and increasing turnover by €500 million. Profitability must also increase, by investing more in branded products (Sodiaal has 16 brands, including Entremont, Yoplait and Candia) with added value such as cheese, dairy ingredients and dairy drinks. From his position as COO, which includes production locations, research and development and purchasing, Gielen is allowed to implement this strategy. “Very exciting to do.”
Kees Gillen
The challenge at Sodiaal is greater than at the time at FrieslandCampina. “At FrieslandCampina, the energy came naturally through the merger. At Sodiaal we really had to generate the energy from within the organization and we succeeded in that. We have already started a lot.” Among other things, Gielen points to the fact that the French group is the largest producer of whey in the world and that work is being done on product development based on whey. He also sees a lot of perspective in the artisanal regional cheeses that Sodiaal produces and which are now being positioned more emphatically on the market. “Those cheeses form an uncut diamond.”
Cooperative thought continues
On the cost side, for example, Sodiaal has canceled raw milk purchasing contracts with supplier associations that are not members of the cooperative. Quite a step for the French cooperative, explains Gielen, “because the cooperative idea in France goes further than just the own organization.” However, Sodiaal processes a significant part of its member milk into the now loss-making basic dairy products such as butter and milk powders. The cooperative therefore does not need the extra milk from external parties at all. “A large part of these purchasing contracts will expire in the coming period. Based on what has already been achieved or is being implemented, we are already at 80% of the target cost savings in 2022.”
Although Sodiaal, with approximately 11.000 member dairy farms, has almost as many members as FrieslandCampina, the difference in milk supply is considerable. Where FrieslandCampina receives over 10 billion kilos of milk annually, Sodiaal collects just under 4,6 billion kilos. “Many dairy farms in France are modest in size,” explains Gielen. “But you also have to see it in the great diversity that the country offers. From Northern France with a climate similar to the Netherlands to the Mediterranean and mountain farmers in the Pyrenees.”
The disappearance of the milk quota in 2015 was not an issue in France, unlike in the Netherlands. In France, with a decrease of 5%, a slightly declining milk supply has been observed over the past 1,9 years. “The French have been milking under the quota for years. Many agricultural companies here deliberately remain small-scale”, analyzes Gielen. “That is part of the French culture, that is how the consumer wants it. This consumer is very farmer-friendly and wants farmers to be protected.”
French inwards
Many challenges that Sodiaal and its members in the dairy chain have to deal with, such as in the field of sustainability and the environment, are similar to those in the Netherlands. “Although the nitrogen
discussion in the Netherlands is extreme”, Gielen judges. “Recently, a delegation from the Supervisory Board of FrieslandCampina visited our Board to exchange knowledge and learn from each other. It was found that there are many similarities. The protests in France and the Netherlands are also illustrative of this.”
Despite the fact that global players such as Danone, Lactalis, Groupe Bel and Sodiaal are active, the French dairy market is very inward-looking, Gielen notes. This has everything to do with the large size of the French market. “And it is also in the French nature. Unlike in the Netherlands, the focus here is simply on our own market.” Despite the fact that many players are active, there seems to be little room for mergers or partnerships, according to him. "Obviously, the mood is polled every now and then, but the individual urge for independence is still greater among all the major players."
Pressure on dairy is increasing
The emergence of plant-based drinks as substitutes for animal milk,
Gielen sees it as one of the biggest assignments for the European dairy industry in the coming years. He calls the step that Arla is taking with the introduction of a vegan line significant. “The pressure on dairy from the vegan and plant-based angle is increasing. How do we as a dairy industry deal with that?”
Kees Gillen
Gielen understands that dairy companies want to seize opportunities in this emerging market. Sodiaal is also active in this area with, for example, a vegan yogurt line under its Yoplait brand. “As a dairy industry, we have to be proactive in the vegetable market and reserve a lot of research capacity for this. In the future, the vegetable market may displace part of the dairy market. As a dairy industry, we have to find good solutions for that.”
On the other hand, the dairy chain must continue to insist on the good nutritional side of products based on animal milk. “The old image that margarine is healthier than butter is not correct in terms of nutritional value. So even with the emergence of plant-based drinks that get in the way of milk, we as a dairy industry must continue to emphasize the good nutritional properties of milk and dairy products.”
Gielen is the only foreigner on Sodiaal's Board of Directors, in a 9-member board led by French CEO Jorge Boucas. This does not cause any friction, Gielen emphasizes, although the manner of consultation is different from what he is used to in the Netherlands. “The French are more cautious and diplomatic. Often in a meeting in the board I first have to apologize and ask if I can indicate some points in the direct Dutch way”, laughs Gielen. “Fortunately, that has always been tolerated until now.”
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