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“Show what we're made of!” This was and is DMK's motto for 2024. In the long-term transformation process, the company has identified and corrected mistakes after the “dent year” of 2023. The mandate for the current year was clear: Streamline cost structures, tighten production processes, adjust human resource planning, further optimise the product and service range, and at the same time increase added value by focusing more on quality rather than quantity. Just as importantly, we kept our sights firmly set on Vision 2030 as a modern, sustainable food producer. “2024 was the busy year we expected,” says Ingo Müller, CEO of the DMK Group. “For five years now, we have maintained the high pace of implementation of our Vision 2030. This is a daily challenge for all of us.” In 2024, the oft-quoted “extra mile” came into play. DMK stepped up a gear on the aforementioned special issues and removed all obstacles.
At the end of 2024, Ingo Müller and Ines Krummacker have good news to report: “Despite the double burden of transformation and special issues, the DMK Group is on track to achieve its self-imposed targets by the end of the year,” says Müller. With a current farm-gate price of around 52 cents per kg of milk, the company is on a par with its competitors. The price paid to farmers has been increased by 13 cents per kg of milk from December 2023 to November 2024. “This shows that we are back on the right track - at the same time, we have also been able to implement key points on our long-term transformation curve in 2024, which is not a matter of course.”
„2024 was the busy year we expected.”
Unpredictable dairy market
The milk market in 2024 is characterised by strong fluctuations and new challenges. Milk supply from farms has been declining since June - this is normal for seasonal reasons, emphasised CEO Müller. Year-on-year volumes have fallen short of last year's levels and, more recently, of the 2022 volumes - with lower fat content too. In addition to seasonal factors, the bluetongue outbreak has partly exacerbated the decline in milk volumes since August. This would not be particularly noticeable in months when there is a lot of seasonal milk supply, but now that the Christmas business is starting, the effect is becoming significant. The result: further price rises.
“It will be difficult for many producers and dairies to maintain sufficient stocks for the upcoming Christmas business,” adds Müller. Demand is far outstripping supply. “The price increases on the spot market are putting pressure on the entire value chain, and the effects are being felt all the way to the end consumer,” says Müller.
Optimising product portfolios
A key part of DMK's strategy is to optimise its product portfolio. Demand has increased particularly in the cheese segment, which plays a major role at DMK. “Being number one in the self-service sector with MILRAM in this highly competitive market is a source of great satisfaction for the entire team and confirms our strategy,” says Müller.
Another focus is on the “fresh/white” category. Here, too, the DMK Group has been able to improve its market position while reducing its share of the less profitable milk powder. This strategic reorientation also focuses production on profitable items and reduces less profitable products. Ines Krummacker, who in addition to her role as HR Director has since January also had interim responsibility for the Finance, Supply Chain, Services and IT departments, sees this as a clear departure from the purely volume-driven approach.
„I see DMK clearly moving away from a purely volume-driven approach.”
Cost reduction, efficiency improvement, adjustment of plant structures
The DMK Group is also adjusting its production structure to increase added value and improve cost efficiency. This has led to the closure of plants and lines in Dargun, Everswinkel, Hohenwestedt and Edewecht.
This will be accompanied by the development of an adjustment plan which will affect around 150 employees at these sites. “These measures are to be implemented by spring 2025,” says Ines Krummacker. She adds that implementation is already well advanced at all sites and that there is a good dialogue with union and employer representatives.
At the same time, the general cost structure is being reviewed and optimised. The result: the measures introduced are on the right track. These include a hiring freeze until autumn 2025, which will also promote internal career paths.
Another factor is DMK's move to a new headquarters in Bremen. This will reduce rental and ancillary costs per square metre and enable the company to bring together previously dispersed functions at one location. Ines Krummacker sees this as a strategic advantage: “Being able to flexibly adapt to decreasing space requirements is an important advantage that helps us make the best use of our resources and work productively.” Here too, a new, improved cost structure complements the benefits of a completely modern office building. Describing the way they work, Krummacker says, “DMK uses all the possibilities of agile teamwork.”
Farming Type 3 to commence in 2025
In addition to cost-cutting measures and optimising existing product ranges, DMK is continuing to drive forward its sustainability and added value programmes. While the NetZero operations are being used to make significant adjustments in the area of climate protection, the newly created DMK Farming Type 3 (HF3) programme will improve animal welfare on farms in 2025. At the same time, the programme offers attractive premiums to help farmers cover the additional costs of the higher standards. “These premiums increase the profitability of HF3 participants and make compliance with the higher standards economically viable,” explains Ingo Müller. Combined with the improved marketing opportunities for HF3 products, farmers have the opportunity to achieve clear differentiation and competitive advantages in an increasingly competitive market environment. “Demand for HF3 products is expected to grow steadily as consumer awareness increases,” says Müller. It looks like a promising outlook for 2025.
