Dairies and multiples battle it out in Germany
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- 28 June 2004
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Increasing pressure on German milk producers after the three dairy groups, Campina, Müller and Hocheifel, discount their milk prices for Aldi.
According to the Dairy Industri Newsletter, the discount chains openly admit to exploiting current market conditions. Aldi defends the new contract by declaring that the dairy companies are at liberty to demand whatever price they want from the retail trade.
“Retailers know that the dairy companies have a substantial milk surplus,” says Theo Müller, the owner of the Müller dairy company.
Aldi’s purchase price for retail packed butter is now below the bulk price at the commodity exchange in Hannover.
A fourth German dairy company, Humana, condemns the actions of Campina, Müller and Hocheifel and has announced its resignation from the German dairy sector organisation,
MIV, because Humana “no longer wishes to sit alongside traitors”. Nordmilch is threatening to follow Humana’s example.
Some of the players in the German dairy industry are proposing that the German co-operative dairy companies merge to strengthen their position vis a vis the retailers. German milk prices are the lowest in 27 years and Nordmilch, amongst others, is severely affected. The company plans to make 1,000 staff redundant and close 11 of its plants.
German merger in the pipeline
The two North German dairy companies, Nordmilch and Humana, are examining the possibilities of closer co-operation, which could result in a merger.
Together the two companies have a turnover of DKK 33.5 billion. Nordmilch has 12,400 co-operative members and approx. 4.3 billion kg milk while Humana Milchunion has 8,000 co-operative members and an annual milk volume of 3.3 billion kg.
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