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  • Archives for September 2010

    Growth in Kazakhstan shop bought milk could open UHT market By Helen Glaberson, 17-Sep-2010

    A growth in UHT milk sales in Kazakhstan over the next five years, coupled with the country’s limited production capacity could give international brands opportunities in the country, says a research analyst from Euromonitor.

    Over the past ten years, the milk market in Kazakhstan has changed significantly, with the consumption of unpackaged milk falling from 85 per cent of the market in 2003 to 43 percent in 2009.

    Consumers in Kazakhstan are switching to milk in stores as there is a risk of contamination from milk bought from the street, markets and home yards. The Milk Union of Kazakhstan started to encourage consumers to purchase milk from shops, resulting in an increase in packaged milk sales.

    Opportunity to launch UHT brands

    UHT milk is currently the most active category in the market at the moment with per capita consumption of the milk expected to grow over the next five years, from 10 litres per capita in 2009 to 16 litres in 2015, said Violeta Mordas a research analyst at Euromonitor

    In the western part of the country, the share of UHT milk is very high. In some towns UHT milk accounts for 90 per cent of all milk sales. The highest consumption of milk is in the biggest city in the country, Almaty where there is both a high level of income and a large population.

    Mordas said that the growth in UHT milk demand in Kazakhstan could open up opportunities for neighbouring countries to launch their UHT brands in the Kazakh market. This is because domestic production capacity for milk in Kazakhstan is restricted due to factors such as the breed of cows available and the limited number of large farms.

    “For example in the neighbouring Russian market, where there is much more fresh milk available, the price of it is lower, and so is the cost of producing it. As a result, a few Russian brands have appeared on the Kazakh market, with prices lower than domestic brands,” Mordas said.

    UHT growth

    The growth in UHT milk is expected to rise for a range of reasons: refrigerating milk is either expensive or impossible due to the hot climate and distances between towns in Kazakhstan. Knowledge and awareness of the health benefits of milk and the method of UHT production are growing.

    In addition to this, consumers are gaining a growing awareness that UHT milk contains vitamins and minerals. There is also the fading perception that for the shelf life of UHT milk to be so long, preservatives must be added.

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    FrieslandCampina grows strongly despite European weakness By Guy Montague-Jones, 01-Sep-2010

    FrieslandCampina has reported strong overall growth in the first six months of the year despite a disappointing performance in Europe.

    First half revenue was up 5.5 per cent to €4.3bn, supported by strong volume growth in Asia and Africa and €51m in positive currency translation effects.

    Cees ‘t Hart, CEO of FrieslandCampina, said: “Particularly in Asia we were able to gain from the economic recovery and pass on the increased raw material prices through to our selling prices.”

    Overall revenue from the Consumer Products International business group, which includes Asia, Africa and the Middle East, grew 15.9 per cent to €1.1bn.

    European weakness

    Meanwhile, in established European markets, FrieslandCampina struggled in the face of tough competition and a weak economic environment. Sales revenue at Consumer Products Europe dropped 2.3 per cent to €1.1bn.

    “The development of consumer activities in Europe is however disappointing,” said ‘t Hart. “In this region both revenue and profit growth are under pressure.”

    As for the other business units, Ingredients grew 11 per cent to €658m in H1 and Cheese & Butter achieved a 2.1 per cent increase in revenue to nearly €1.1bn.

    Improved profitability

    With the exception of Consumer Products Europe, all divisions contributed to improved profitability figures at FrieslandCampina. Operating income in H1 doubled to €238m compared to the equivalent period last year.

    The Dutch dairy firm said the contribution of the Ingredients business was particularly positive. It turned a negative operating performance of minus €45m last year into a positive contribution of €43m this time around, thanks to improved sales of special ingredients and higher prices for standard products.

    The improvements on the operating level translated into higher net profits, which rose to €156m from €78m last year.

    Despite the recovery in H1, FrieslandCampina said that it can not make a definite statement about expectations for the full year. The company explained: “The economic outlook is at the moment uncertain. Minor fluctuations in demand and supply on the world could have major consequences for the price developments of dairy products.”

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