Value-added churns profits for Friesland

The industrial division, which includes the Domo, Kievit, and Professional businesses, has reported revenue of €797m last year, which it says is attributable, for the most part, to growth in high value-added speciality products produced by its ingredients divisions, Friesland Foods Domo and Friesland Foods Kievit.

"The chosen strategy to change from a bulk-oriented organisation into a leading supplier of high-grade ingredients has clearly paid dividends," said the Dutch multinational.

Friesland Foods Domo Friesland Foods Domo is a supplier of high-quality whey and milk-based ingredients for the food, infant formula, and pharma markets.

Growing demand for functional foods, including infant formula, has translated into a demand for its ingredients.

Indeed, not only was the higher sales value for last year boosted by higher selling prices, as a result of global dairy price hikes, but volume sales were also up.

In keeping with its shift away from bulk, the company has played a balancing act with the ingredients in its portfolio; for instance, high sales of its milk calcium products Vivinol GOS and Vivinal MCA have meant the production of lactose and pharma lactose had to be reduced.

The company is also planning to drill further into milk's potential to deliver ingredients for different uses.

Last year it invested in ingredient production technology, which it says it special because it extracts the ingredients directly form milk rather than from whey - as has been done in the past.

The main benefit of this is that the resulting substances, like protein, lactose and whey, are very pure.

In addition, since milk is much richer in beneficial elements than whey, there is more potential to derive more ingredients from it.

In addition, the technology allows for ingredient extraction under very mild conditions.

Construction of the new production facility is scheduled to start this year.

Other big news for Freisland Foods Domo has been the renovation of the galacto oligosaccharide plan tin Borculo, The Netherlands, which brought great production capacity into play.

This, it said allows it to respond to rising demand for soluble dietary fibres for children's foods, dairy products and drinks.

The company also signed a joint venture agreement with Warrnombool Cheese and Butter factory Holdings last July to build a new ingredients factory in Australia.

Expected to be operational in 2009, the 50-50 JV is to be called Great Ocean Ingredients.

Friesland Foods Kievit Friesland Foods Kievit, which specialises in micro encapsulation and spray drying of food ingredients, also saw a sharp increase in profit last year, as a result of a "significant" increase in revenue, margin stability (despite raw material costs) and higher specialty product sales.

The food industry is showing increasing interest in the encapsulation of sensitive food ingredients to enable them to withstand the rigours of processing and in harsh product environments.

In particular, fish oils are attracting much attention, as manufacturers are exploring their use in a broad spectrum of food products.

As a direct result of the fish oil phenomenon, Friesland Foods Kievit has upped production at its facility in Meppel, The Netherlands, where it now has a five-sift system in place.

The company is also targeting the emerging Asian market, and opened a sales office in Salatiga, Indonesia, in early 2007.

The company says Asia already accounts for 24 per cent of Friesland Food Kievit's total turnover, a figure that the company expects to grow further in the future through an extended focus on added health and quality benefits.

Moreover, it has built on this base with the investment of €20m in a new drying plant in Indonesia, announced last month, for producing encapsulated products to expand the group's portfolio in the wider Asian region.

In order to facilitate future growth, the Kievit business has also set up a separate business unit solely dedicated to the development of new encapsulation technologies.