The DMK Group is at a crucial point in its development. The company has undergone major changes in recent years to prepare for the future. The focus is on increasing efficiency, digitalisation and sustainable production. The following is a discussion on the current status of DMK's transformation and the planned merger with ARLA, one of the major players in the dairy industry.
How valuable and central are changes for the DMK Group?
Ingo Müller: The DMK Group has undergone a profound transformation in recent years. Our primary goal is not only to respond to market changes in the short term, but also to create a stable, competitive and sustainable corporate structure for the long term. To this end, we have redefined our growth areas and consistently focused on businesses with long-term potential. The key question was and is: Where can we increase our market share, and which businesses are no longer viable for us? The answer is clear: we want to invest our resources in high value, high margin product categories. In short, we want more class rather than mass. This is not an easy path, but it is essential for our success. And we are starting to see results.
„However, the planned merger also puts us in a good economic position.”
What role does the planned merger of DMK with the Danish dairy company ARLA play in this?
Ingo Müller: We are both healthy cooperatives and have been in discussions since the beginning of the year to address this question: Given the global economic and political changes, does it make sense to merge with a major player in the dairy industry? The focus was on shared values and a common corporate philosophy, as these are what define the character and success of our work. The discussions were conducted on a basis of absolute trust and led to the conclusion that ARLA and DMK share the same values and a common vision of value creation, which means that a merger would make sense for both sides. We would no longer be competitors, but a dairy with collective strength.
Philipp Inderhees: ARLA's farmers have the same interest as we do: a competitive milk price. Not only do we have a strong product portfolio, but ARLA's global reach will enable us to reach consumers and customers beyond our geographical borders in the future. Overall, we are strengthening our resilience, stabilising our earnings and improving our performance. With our combined expertise, we will drive technology and innovation in the dairy industry, while providing a strong home for our farmers.
What does the merger mean for DMK farmers? Will decisions still be made democratically?
Ingo Müller: Arla Foods is a co-operative with farmers in seven countries. The democratic structure gives decision-making power to the board and the representative assembly. During a two-year transition period, all the democratic bodies at DMK and DOC Kaas will be adjusted so that the most important decision-making mandates are also represented in Arla's board, representative assembly and management team. At the end of the transition period, the structures of DMK and DOC Kaas will be integrated into Arla's existing structures. This means that a DMK farmer will have the same influence as any other farmer in Arla Foods right from the start.
Philipp Inderhees: We will of course continue to focus on strengthening our position in Germany. As DMK, we are already strong. But the planned merger also puts us in a strong economic position. Despite the decline in the European milk pool, we are gaining resilience through new, diversified product portfolios and market positions. As Europe's largest dairy co-operative, we can build partnerships with customers to strengthen their businesses and create an attractive environment for farmers, employees and business partners - in Germany and in the markets expanded by ARLA.
What factors influence your planning in general?
Philipp Inderhees: Economic conditions are changing at ever shorter intervals and have undergone profound changes in recent years: geopolitical tensions, changes in trade policy, inflation, the energy crisis, labour shortages, bluetongue disease and changing dietary habits are having a fundamental impact on our market environment. These developments are forcing us to constantly review our strategic planning and respond flexibly to change.
Müller: One example is plant-based milk alternatives, where we originally expected strong growth, but the market has been slower than expected. We have therefore adjusted our plans and are focusing more on our core competence - milk processing.
Inderhees: We are also seeing a sharp increase in global competition. The Asian markets in particular have massively increased their own milk production, which is further intensifying international competition. It is important to be flexible and to position ourselves as well as possible for the long term.
„One of the biggest challenges is the decline in milk production in Germany and Northern Europe.”
What major challenges do you see for the DMK Group and ARLA in the coming years?
Müller: One of the biggest challenges is the decline in milk production in Germany and Northern Europe. Whereas in the past larger farms were able to compensate for the decline in smaller farms, we are now seeing stagnating or declining overall production. This has a direct impact on our raw material market. These developments require a flexible and forward-looking strategy to maintain our position.
Inderhees: In addition to raw material availability, consumer behaviour has also changed. Price awareness is increasingly dominating purchasing decisions, which is a challenge for premium products. We need to develop innovative products that are both high quality and competitively priced.
How does the DMK Group measure the success of its transformation so far?
Müller: The success of our transformation in recent years has been remarkable: we are one of the market leaders in cheese and quark, we have a strong market position with Milram in the product categories of spring quark, buttermilk drinks and sliced cheese, we are number one in food service in the DACH region and we have created an important and valuable business area with our whey processing. Furthermore, we have almost achieved a turnaround in Baby and have established continuous improvement (Tiger Programme) across most of the business. We have a highly motivated, diverse team working very efficiently in our matrix structure with a constant focus on costs. We have created process structures that enable us to successfully manage the diversity of our product portfolio and our customer relationships. And through our sustainability strategy we have built an excellent image as a valuable and responsible partner in the industry.
What are the key business objectives for 2025? What specific actions are planned?
Inderhees: Growth, efficiency, sustainability - this is our way forward. The pillars of our growth strategy are a strong retail and foodservice business in the branded and private label segments, particularly in our core markets of Germany and the Netherlands. As the DMK Group, we produce high-quality dairy products, focusing on cheese, attractive segments of the white line and the expansion of our international ingredients business. By the end of 2026, we will have saved up to 120 million euros by further optimising our processes, increasing automation and investing in more efficient production equipment. We aim to minimise production downtime and better anticipate market trends through intelligent data analysis. In order to successfully implement these changes, we are investing more in the development of our employees. Training and development programmes will focus on digital skills, process optimisation and sustainable business management.
Müller: At the same time, we are reviewing our product portfolio by focusing even more on profitable segments. We will reduce our presence in low-margin export markets while strengthening our position in core regions. In the Netherlands in particular, we are making strategic adjustments by implementing new organisational structures to enable us to respond more quickly and flexibly to market requirements.
How important is sustainability for the future of the DMK Group and ARLA?
Inderhees: We see sustainability not only as an environmental imperative, but also as an economic factor. We want to create value for our customers and farmers by combining sustainable production methods with economic benefits. The biggest challenge remains the economic implementation. Sustainability is about future viability - but it comes at a high cost, and we need to recoup that cost with our products in a highly competitive market environment.
What role will the DMK Group play in 2030?
Müller: The planned merger will support our strategy of shaping the dairy industry of the future. We will still be a leading company in the dairy industry in 2030. Our product portfolio will continue to be based on milk, supplemented by innovative products that meet changing consumer needs. Our mission is to maximise the value of our farmers' milk while creating opportunities for growth. This will not change.
