Despite the high costs, Emmi is on track, and the dairy farmers can also breathe a sigh of relief. But you have to pay at the cash register.
The dairy industry is also groaning under inflation. And so, by far the largest Swiss milk processor, Emmi grew in sales last year, mainly due to higher prices – to over four billion francs. Profits fell – partly because Emmi has to pay more for the raw milk.
Emmi is cheese, cream cheese, dairy products, but also so-called premium products such as caffè latte or protein drinks. Anyone who reaches for it in the shops has to pay significantly more. Fresh milk, for example, costs an average of 15 centimes per liter more, butter up to 50 centimes per 250 grams.
Tough core business
And so sales at Emmi are also increasing, as CEO Ricarda Demarmels explains: “We have grown very strongly in line with our strategic priorities. On the one hand, there are our niche markets such as Emmi Caffè Latte specialty cheese, premium desserts and milk alternatives.» That means: In the core business of dairy products and cheese, there is resin. Volumes are slightly declining, especially in Switzerland.
We have grown very strongly along strategic priorities, including in niche markets
Times were also easier for the milk processor. Energy and transport costs went up, but so did the price of milk. “The milk price is one of those input cost factors that kept us busy last year.” According to Demarmels, the response was to increase efficiency, cost-saving programs and “responsible price increases”.
Legend:
The supply of milk has become scarcer in recent years. The prices are correspondingly high. Conveyor belt at the Emmi Mittelland Molkerei in Suhr (AG) in autumn 2022.
Keystone/Christian Beutler
Emmi was able to pass most of the higher production costs on to the retail trade. The high price of milk – which rose by more than five percent to just under 75 centimes per kilogram – has not yet sparked any celebration among the farmers.
Farmers’ association put into perspective
“But this price increase was also necessary because milk prices have been very low for many years and because production costs have risen massively in 2022,” says Farmers’ Association Director Martin Rufer. And so the bottom line is that the farmers still earned less from milk last year.
Emmi, however, was able to hold herself harmless. The profit went back somewhat to CHF 194 million. But this is mainly due to an impairment in the German organic business. Otherwise things are going well at Emmi abroad. In the USA in particular, Emmi grew thanks to cheese, which is mostly produced locally, and in Brazil thanks to locally produced yoghurt.
Fewer farmers, fewer cows, less milk
Emmi now does just as much business on the other side of the Atlantic as it does in Switzerland. In Switzerland, Emmi is struggling with a saturated market. Money is only made with premium products. Emmi has to, too, because milk as a raw material has become expensive and scarce.
The number of farms producing milk has fallen by more than a quarter in the last ten years.
This is a consequence of years of low prices for raw milk, explains Rufer from the farmers’ association: The number of farms producing milk has decreased by more than 25 percent in the last ten years. The number of dairy cows has also been declining for years, so less is produced accordingly.
Receipt for the consumer community
But Emmi is confident. The milk volume has stabilized and raw material prices have not risen further for the time being. However, the most recent price adjustments will remain in effect for consumers, as energy and transport costs remain high.
The retailers are unlikely to withdraw the most recent price increases, which, by the way, have passed on more than the purchasing costs to consumers.