Now that the dust has settled around the announcement of the merger between Arla Foods and DMK Group, we speak with DOC Kaas. Guus Mensink (chairman of the cooperative) and Geert Hartlief (director of strategy NL) have been intensively involved in the merger talks in recent months and are optimistic about the future. Mensink: 'Our members will immediately receive a higher milk price and membership of the strong European dairy cooperative Arla. And yes, the name DOC Kaas will disappear.'
Just before New Year's Eve, the talks gained momentum. According to Mensink, it is impossible to say who initiated the merger. "Something like that happens behind the scenes. DMK and Arla have been working together intensively for over ten years through the joint venture ArNoCo. That works out very well. From that perspective, the merger is a logical consequence."
Now is the time
The announcement was received positively by the cooperative supporters of DOC Kaas. "Of course, some members have questions. These are mainly about the timing of the merger, not so much about its necessity," says Mensink. Looking at the milk price, a merger is not necessarily necessary now, according to Hartlief. But governing is looking ahead: "If you look at the political and climatological challenges facing dairy farming in Northwestern Europe, this is a logical step. Together we can better meet these challenges. You can do something like this better when both cooperatives and the company are still strong, that is why this is the time."
The shrinking milk pool in Europe is certainly one of the reasons for the merger, Mensink acknowledges. But the chairman mentions more reasons. "We also see room for synergy benefits by combining production capacity and each other's dairy brands. The product portfolios of DMK and Arla are quite complementary to each other and that strengthens each other in the market." According to Hartlief, DMK is big in yellow cheeses, while Arla has traditionally focused on softer cheeses such as mozzarella and feta.
Geert Hartlief
No takeover
From a business perspective, Arla Foods and the DMK Group are a good fit, according to both merger partners. Also on a cultural level. The differences between Danes, Germans and Dutch are not that big, according to Hartlief. But the emotional aspect also weighs heavily in the cooperative world. A merger is often a matter of give and take. One of the things that is given is the disappearance of the name DOC Kaas. Mensink: "That name is associated with more than 125 years of history in the dairy sector." Hartlief does not think the reasoning that DOC Kaas and DMK are actually being swallowed up by Arla is correct. "I understand that people sometimes reason like that, it really is a merger. The name Arla was deliberately chosen, especially because of the strong reputation it has internationally. That is a concept, also on the store shelf."
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Transfer of capital |
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Currently, cooperative DOC Kaas still has a 10% interest in the German dairy company DMK Group. This interest will be transferred with the merger. The more than 600 members of DOC Kaas will automatically become members of dairy cooperative Arla. The entrance fee of €0,05 per 100 kilos of milk that Arla normally charges for membership will not apply to the merger. |
More attractive for switchers
With a turnover of around €19 billion and a milk lake of 19 billion kilos, Arla will soon be by far the largest dairy cooperative in Europe. Looking at the Dutch market in particular, the relationships between DMK and Arla are exactly the opposite of the overall picture. With a few dozen member dairy farmers, Arla is a relatively small player in our country. Both DOC Kaas and Arla are currently still looking for dairy farmers in our country separately. Arla is often less visible at the moment, but after the merger it will possibly be more on the radar of dairy farmers who are considering switching to another processor. "That would be great," Mensink responds soberly. "In any case, we are happy that the Arla milk price will soon be available to our members. Including additional payments, this has been higher than that of DOC Kaas over the past five years. According to the chairman, this makes the merger extra interesting from a business perspective." According to the chairman, the Arla milk price is more stable and the additional payments are attractive. Last year it was €2,20 per 100 kilos, says Mensink.
In June 2025, the cooperatives involved will vote on the final agreement. After that, the merger process will start, which will take two years. "We will then retain the milk price system of DOC Kaas, as well as our delivery conditions. However, our members will receive at least the milk price of Arla during the transition period. The differences will be settled afterwards. In fact, the Arla milk price will be immediately available to our members and we will reap the benefits of the merger right from the start," Mensink concludes.