Kaptein is sailing its own course with branded dairy products

When food inflation in the Netherlands exceeded 12% in February, Kaptein introduced a new premium brand of cheese spread in the Dutch retail sector. The family business is convinced of branded dairy, despite the fact that there is currently a shift to cheaper private label products. The family business is also clearly focusing on efficiency instead of growth, given that milk production in the Netherlands is declining. "Perhaps this will make us decide to withdraw from a number of export markets that are more difficult to serve," says commercial director and co-shareholder Anne van Egmond.

We are talking to Van Egmond at Kaptein's main location in Heiloo, just under the smoke of Alkmaar. This modern building was built about eight years ago and everything looks spic and span. Kaptein says it has an important and unique position in the chain as a producer of processed and powdered cheese, but certainly also as a packer of butter and cheese. They prefer not to comment publicly on volumes and turnover figures. "We produce 180.000 tubs of butter per hour, to give you an impression." The raw material in the form of cheese and butter is purchased from a wide range of Dutch dairy companies, which are then used to make a wide range of end products. From consumer butter to cheese for pizza. "Our distinctiveness lies in three areas: packaging, sustainability and innovation. We are good at this and that is where all the attention is focused." Have they ever considered integrating forwards or backwards, as other cheese makers in the Netherlands have done? "Of course we have considered this at times, but at the moment we keep focus on what we are doing."

Innovation is your distinctive character, you say. How do you do that with 'straightforward' products such as butter and cheese?
"Being distinctive compared to the bulk segment is extremely important to our company. We do innovation in several ways. For example, in packaging butter in packs and tubs of 10 grams. 10 grams came onto the market, under our own brand Real Butter. This was a huge step for us. The machines had to be adapted. But now we have developed the most sustainable packaging currently available on the market. The composition of butter is fairly uniform, but that does not mean that as a producer you cannot be distinctive. In our recipes, we focus on spreadability and taste. The branding is also important, of course. We recently facelifted the packaging of Real Butter. The authentic The Dutch grain mill was then replaced by a windmill, which means we are completely in line with modern Dutch dairy farming."

"Our innovations in the field of cheese currently mainly end up in production companies that use processed cheese as a solution. A cheese that you use in lasagna seems to a layman to be the same cheese that goes over pizza, but nothing could be further from the truth. We develop this processed cheeses for products that you often find on the retailer's shelf. A lot of research precedes this, after which countless tests are done before the product is actually delivered."

In February you introduced Real Cheese Spread, which is your own premium brand. That must have been quite exciting in times of high food inflation… 
"The introduction of Real Cheese Spread was indeed exciting. We had been producing cheese spreads for Milner for many years, but they decided to stop. This created a gap in the market and we had to act decisively. It's no surprise that in times of crisis or high inflation, private label is more often chosen. After all, consumers have less to spend and then more often opt for cheaper products. If inflation decreases, the A-brands will gain ground again, I am really convinced. We are now actually seeing again that a turnaround is taking place. Sentiment is becoming more positive, we notice. That A brands are expensive is nonsense. The quality is better in all aspects. A group of consumers is willing to pay for this, just as you pay more for a good bottle of wine. Incidentally, an A-brand is always the first to innovate ingredients, taste and packaging."

Milk production in the Netherlands is under pressure, is this at the expense of growth ambitions that you undoubtedly have?
"Whether we like it or not, the number of farms will decrease due to, among other things, a lack of succession, dairy farmers who stop doing business, or even being bought out. We have already seen this happening in the past ten years and it is likely that this trend will continue. therefore less milk will be produced. The question then is: do you want to grow in the number of countries you export to with this information in mind, or do you opt for efficiency. We opt for the latter. By making clear choices and doing where you are really good at. A consequence of this may be that we will withdraw from a number of export countries that are more difficult to serve."

Does the contraction of milk production in Northwest Europe also mean structurally higher dairy prices?
"If milk production shrinks enormously, this will have an effect on dairy prices. Farmers will have a better position in the chain. Milk processors can produce products with a high margin and products with a lower margin become 'scarce', by producing them less or not at all. As a result, the low-margin product will create more demand, which will cause the price to rise. Competition will arise at the product level. This will lead to a higher price level for dairy products, until the new equilibrium is found. The structurally higher prices may accelerate the transition to plant-based dairy."

Speaking of plant-based dairy, to what extent is that market interesting to you?
"At the moment, the plant-based cheese substitute market is not very large. Less than 5% of our sales are currently plant-based. The strong price increases last year dampened sales somewhat. Nevertheless, we see this market maturing in a few years. generation growing up now, especially in the cities, will opt more for a hybrid way of consumption. One time cheese, the other time plant-based. The taste difference that you now taste between cheese and plant-based will become smaller in the coming years. The parallel with the development from butter to a substitute such as margarine decades ago, could just as well be the development of the plant-based cheese market. The emerging generation got used to the taste of margarine. Margarine gained a serious market share as a result. The higher prices for dairy products can also fueling the transition."

"Two years ago we started developing plant-based dairy. This was quite late compared to the existing brands. Now, as far as I know, we are the only producer who makes plant-based cheese slices with a complete nutritional profile, i.e. with vitamins B2 and B12. We produce plant-based cheese substitutes in slices and grating packages with a high protein content, which is used by the body as a building block.We make and package a Gouda natural with a taste that is very close to young cheese, but also a chili variant and a smoked cheese variant. only supply the plant-based cheese substitutes in round slices, so it is clear whether you opt for plant-based or milk-based cheese."

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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