Only a cheese producer with a great love for their product would liken cheese to a Rolex. But Dominik Büchel of Swiss dairy group Emmi makes the comparison to show the company is focused on expanding its business with premium, specialty products rather than simply chasing volume. In this month’s Just the Answer interview, Dean Best spoke with Emmi’s European sales director about the effects of recent rises in dairy commodity prices and the company’s plans for steady expansion internationally.
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j-f: So, what is Emmi looking for from its presence at Anuga?
Büchel: Our main focus here is to present new products – we have some opportunities here to see our customers in another way. Our customers are coming to us and it’s more informal, more social, it’s not only business
In which sectors is Emmi looking to innovate most right now?
In fresh products, if you are looking at new products. Cheese is boring – it is very difficult to introduce new cheeses. We did it last year with a new cheese but it was not really a success in export markets. It’s very difficult to innovate in cheese.
But cheese remains a core part of Emmi’s business?
Our cheese is for me like a Rolex. You never plan a Rolex as a volume business – we have to be premium, exclusive, a speciality – then you get the price. Cheese is 50% of our business, maybe a little bit less. In exports, cheese is certainly more than 50%. Fresh products are around 40% of our business. Cheese is more stable, more traditional. What we are now looking for in cheese are differences in packaging systems. We started with Swiss cheese on the counter, then in portions, then in slices, and now the final step is in rolls. It’s about convenience.
Emmi has restructured its cheese business this year. What, for instance, was the rationale behind the acquisition of a stake in Italy’s Ambrosi?
Well, why not use the structure we have for premium cheeses across Europe as well? We have a minimum participation in Ambrosi of 25%. Ambrosi is very strong in Italy – and their focus is on the premium market. We want to not only specialise in cheese from Switzerland so Ambrosi is a strategic new participation for us to sell premium European cheeses.
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By GlobalDataEmmi warned earlier this year that the rising cost of dairy commodities would put pressure on its business. What exactly has the impact been on the company?
We were in a more comfortable situation because our products are more premium but we’ve never seen cost increases like this before. Before it was the other way around; supply was bigger than demand. Now, demand is bigger than the supply, so [commodity] prices have increased. Hopefully, the whole sector will balance. It will be tough, but I believe it is a challenge for the whole milk sector worldwide.
How easy has it been to pass on price increases to retailers?
It is difficult to increase price because buyers have been trained to say no. It’s not easy. We are having those discussions with retail buyers at the moment. During this show, I think it will be one of the main issues to discuss. We have no space to compromise – if we cannot increase prices, Emmi will not exist anymore in the future. Our costs – which also includes energy – will rise this year by CHF120-CHF140m (US$103-120m), so there is absolutely no room to compromise. We can’t keep our concepts alive while losing money.
Has Emmi succeeded in getting price increases from retailers?
We will increase the prices of our fresh products on 1 November. In Switzerland, the milk price we pay will have increased by CHF0.06 a litre, but that is less than in the competing countries around us. We will still be more expensive than our competitors, for sure, but the differences with our competitors will now be smaller. The question will be whether consumers are willing to accept these price increases.
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Emmi’s European sales director, Dominik Büchel |
Is Emmi looking to expand its business outside its core markets in Western Europe and the US?
Cheese has been easier to export to Eastern Europe because of issues with shelf life. It’s difficult to launch fresh product concepts that have a long shelf life. The problem with cheese is that the volume is too small. We export cheese to Russia. We are doing quite well, volumes are increasing slowly but regularly but we have to be careful about financial risks. It is very important for Emmi to only focus on certain concepts and countries.
Has Emmi found it difficult to expand outside Switzerland in the past?
We grew fast – maybe we did too many things. France is an example, we expected too much, dreamed maybe. But we have to grow. We have to focus on an international strategy – that is very important for Emmi. We cannot grow anymore in Switzerland and it will be a big job to keep what we have in Switzerland.
