Wageningen's white stuff: FrieslandCampina supplier profile

Every dairy company worth its salt needs at least one cow in its reception, and FrieslandCampina’s shiny global innovation centre in the Dutch town of Wageningen is no different. Cows litter the building in sculptural and photographic form, while the supplier’s devotion to milk also extends to a Guggenheim Museum-esque spiral sculpture, which soars up to the centre’s atrium roof to represent the flow of the white stuff.

It’s a fitting celebration of FrieslandCampina’s status as a bona fide dairy giant. Operating in more than 100 countries, it turned over more than €12bn last year - making it bigger than both Arla and Müller. In fact, it’s the sixth-largest dairy company in the world. But ask any UK consumer who or what FrieslandCampina is, and you are likely to draw a blank. In 2016, FrieslandCampina UK posted sales of just under £48m - according to its latest accounts - underpinned by the performance of its Yazoo flavoured milk range, which is produced in Belgium, and a sprinkling of supermarket own label business. “We’ve got a limited footprint in the UK,” admits its UK & Ireland MD Gavin Blair.

Now, however, the Dutch dairy co-op has set its sights on growing its business in the UK. And the work being done by 400 scientists and researchers at Wageningen - the starting point for all of FrieslandCampina’s NPD - is “instrumental” to its ambitions, says marketing director Will Jones.

So what exactly are Friesland’s plans for its UK business, and could Brexit scupper them?

“We need to continue playing in our heartland of dairy drinks and Yazoo No Added Sugar is a big part of that. But there are also other opportunities”

Friesland’s biggest innovation in the UK in recent years has been its trailblazing Yazoo No Added Sugar variant. Launched in 2016, it is made using a “unique” technique honed by staff at Wageningen, which involves splitting lactose from semi-skimmed milk into glucose and galactose. This creates a taste four times sweeter than lactose alone and ultimately means there is no need to add any extra sweeteners, says Jones. “It was a very creative solution to a very challenging brief.”

Yazoo No Added Sugar has gone from strength to strength since hitting UK supermarket shelves, helping the overall Yazoo brand extend its market-leading dominance in dairy drinks with sales up 6.3% to £48.2m by the end of 2017 [Nielsen/The Grocer Top Products 2017.] But neither Blair or Jones are content to stop there, and are keen to build the UK business into more than just a vehicle for Yazoo. They have the full backing of the wider business, which is attracted by the “sheer scale” of the British market, and the fact its German division is roughly 11 or 12 times the size of the UK business. “The headroom is really exciting for my bosses,” says Blair, who joined the business in November 2016 from Diageo. And while tight-lipped on specific details, he sees the UK business growing in three key areas. “We need to continue playing in our heartland of dairy drinks. But there are also other opportunities,” he says.

One of those opportunities is own label, where there is scope for Friesland to expand its business with UK retailers in some categories. “Private label is a challenge as we obviously don’t have any British milk,” adds Blair. “It’s the ticket to the dance for some retailers. But there are also many other categories where that’s less important.”

Friesland is also eyeing the launch of new brands into the UK. “Our ambition is to launch another brand and for FrieslandCampina to become more of a portfolio player,” says Jones. “Whether that becomes a cheese or a yoghurt is yet to be defined, but certainly we see opportunities to create a new brand and to bring international brands developed at Wageningen to the UK.”

This will not be the first time Friesland has attempted to bring overseas brands to the UK. It launched yoghurt drink Optiwell to great fanfare in August 2015 with a pledge to spend £25m in marketing over the next four years, but the brand was delisted less than a year later due to poor sales.

However, while Blair admits launching new brands will be the “hardest challenge” for Friesland in the UK, he insists Wageningen gives it the resource, insight and R&D capacity to develop new brands and adapt existing ones for the UK.

So far, the company has highlighted “two or three categories” where it could bring NPD to the UK, says Jones. “We’ve done a full analysis of most categories, and benchmarked them on attractiveness versus our ability to deliver,” he adds.

In particular, Friesland sees opportunities in dairy snacking and healthy dairy products such as quark, as well as nutrition and indulgent dairy. This could open up possibilities for a host of existing Dutch brands, including its Mona Oops! range of dairy desserts - something Blair says the UK business is already “looking at”.

“The key point here is we want to expand from our current footprint. We want to grow”

Exactly how these new brands would be marketed in the UK is yet to be decided. Blair is a fan of Arla and Müller’s masterbrand strategy, but admits the name FrieslandCampina is “a bit of a mouthful”. “We want to build our name and reputation with the trade, but the actual consumer brand would be much more dictated to by consumer research,” he says, pointing out Campina is a “consumer brand we have in other parts of Europe”.

What is certain, though, is that Friesland will continue to innovate and test new products out on UK consumers. “Building brands in the UK isn’t cheap, and it’s not easy,” says Blair. “But the key point here is we want to expand from our current footprint. We want to grow.”

Brexit could, of course, pose a problem for the business, which currently has no manufacturing capacity in the UK, just sales offices. However, while it has “no firm plans” so far, Friesland is exploring whether it could store more products in the UK or even begin production here in the event of a hard Brexit, says Blair.

“If it did end up being a hard Brexit, and our supply chain or cost of goods became challenged, I certainly would be talking to my bosses about whether they would be open to some production over here.”

With such evident passion for growing its UK business, FrieslandCampina may well be on its way to becoming a bona fide dairy giant in Britain, as it is elsewhere in the world.