Background Milk
FrieslandCampina is now at full war strength in Asia
In just a month, FrieslandCampina has completed the construction of two large dairy factories in Southeast Asia. No expense has been spared for this. In both Malaysia and Indonesia, the cooperative dairy group believes it can respond more quickly to interesting growth markets with Western-looking production locations. FrieslandCampina's foreign participations are sometimes sensitive to the cooperative's Dutch supporters, but the criticism is completely unjustified, the dairy group assures.
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FrieslandCampina's top executives are in Indonesia this week, where the new factory on the outskirts of the city of Cikarang was opened on Tuesday. FrieslandCampina has been active in this country through its subsidiary Frisian Flag since 1922 and they are far from finished. It is proudly reported that a record investment of €256 million has been made for the new factory. CEO Jan Derck van Karnebeek and his associates had immersed themselves in local outfits for the festive occasion, which resulted in nice images. At the end of May, a similar scene played out in Malaysia, where subsidiary Dutch Lady also celebrated a factory opening. This means that two major long-term projects have been completed almost simultaneously in the same region.
Struggles in Nigeria
The question is whether the member dairy farmers are also happy with the investments made in Asia. They are sometimes inclined to think that the foreign adventures mainly cost money instead of contributing to extra milk money, which is ultimately what it is intended for. Given the struggles of FrieslandCampina in Nigeria and (to a lesser extent) Pakistan, there is something to be said for that idea. Members have often not forgotten the ultimately failed adventure with then partner Huishan Dairy in China a few years ago.
Skepticism unwarranted
A spokesperson for FrieslandCampina emphasizes that such skepticism is absolutely not necessary for the investments made in Malaysia and Indonesia. Without wanting to go into detail, it is reported that these activities contribute positively to the dairy company's results. FrieslandCampina also sees a lot of growth potential in the densely populated Southeast Asia in the future. 275 million people live in Indonesia and the average dairy consumption is now about 16 liters per head. This could easily grow to 20 liters in the coming years, they think at FrieslandCampina. The new factories are also seen as a hub to other Asian markets.
The factory in Indonesia can be expanded to 1 billion kilos of dairy product, of which 70% is currently already filled. Naturally, not a drop of Dutch milk is used for this. The supply comes from local dairy farmers who are often organized in a fragmented cooperative manner. Through information and training, the Dutch dairy giant believes it can significantly scale up milk production in the coming years, given that daily production is now often only 7 liters per cow.
Half-year figures
The success of activities in Asia will be easier to monitor in the coming years than before. FrieslandCampina will report the results per business unit separately. At the end of this month, FrieslandCampina will release its half-year results and this new way of presenting will be shown for the first time. Not only for the past six months, but also retroactively for 2023. Both Malaysia and Indonesia fall under the Asia business group. Whether the skepticism of member dairy farmers is justified remains to be seen soon enough.
