Małgorzata Cebelińska, Vice President of the Board at SM Mlekpol talks on dairy sector in Poland, company’s investments, innovative products, portfolio development over last years, export offer and global trends.
2023 will be a difficult year, for the dairy industry as well. How do you intend to face it?
The past year has brought negative phenomena that we will probably face in the coming years. High inflation, which has affected the whole world, portends many difficulties – also in the dairy industry. Mlekpol’s strength is multi-directional production, capable of being dynamically adapted to the needs of the market and the customer. We believe this flexibility will allow the Cooperative to survive the hardest times. If the situation improves and the market returns to the dynamics we have known, there are chances that the dairy industry will not suffer and dairy producers will still be interested in development of their farms.
In 2022, SM Mlekpol continued the previously launched investments, including pro-ecological ones. How important does the Cooperative find this aspect of development?
Systematic investment ensures Mlekpol’s development and efficient operation. The investments mainly relate to the implementation of milk processing technologies. They give, apart from innovative products and technical solutions, environmental benefits, very important to the Cooperative. Technical infrastructure and modern machinery are also pro-ecological investments that enable improvement of work efficiency and lower energy consumption. Individual plants modernize their sewage treatment units and implement cogeneration systems. Our business partners also appreciate our measures aimed at using environmentally friendly product packages compliant with the ideas of sustainable development.
Does innovation go hand in hand with ecology?
It should. These are the consumer expectations and the changing consumption patterns. First of all, ecological innovation has a positive impact on the endangered natural environment, increases the competitive advantage on the market, but also it also reduces production costs (an extremely important role of state governments). This is not just about production technologies but entire technological systems, production processes, products, operation, equipment, as well as organizational and management procedures. In this aspect, of course, the knowledge and skills of employees involved in the production process, as well as development of the product quality policy, are necessary. Eco-innovation is obviously an additional cost for Mlekpol, yet there is no turning back from this direction.
People are the strength of every company – please tell us more about the “heart” of the company, important relations, and the consumers themselves.
We take care of people, naturally – this is obvious, as we have been doing itfor more than 40 years. Meeting the trends and needs, we provide consumers with high-quality milk products originating from the cleanest regions of Poland. We care about the surrounding environment and animal welfare. The heart of the company is created primarily by the people who are its greatest capital, strength and future. The Cooperative associates nearly 8,500 farmers and 2,800 people employed at 13 plants throughout Poland. Their knowledge of milk production is drawn mainly from their own experience – as they come from regions where the beautiful tradition of dairy farming are passed from generation to generation. We believe in the strength of tradition and values, because whatever Mlekpol does, it does with people, for people and with people in mind.
Quality, tradition and… – what is the third crucial factor defining the cooperative itself and its offer?
Openness – to the needs of the customer, the market, and the foreign partners. This also means watching the consumer trends and keeping up with them, which results in innovative implementation of the dairy products. In cooperation with the Institute of Dairy Industry Innovation in Mrągowo, SM Mlekpol develops ideas and adapts its portfolio to the consumer and market requirements. The range of Mlekpol’s products already includes about 500 items characterized by high quality, a simple, clean composition, an excellent taste. They are under various brands in Poland and abroad.
How will the SM Mlekpol’s portfolio develop in the near future? Consumer behaviour has changed a little, will it affect your offer?
Mlekpol’s product offer is always adapted to the changing market situation. Therefore, we expect increased interest in drinking products, desserts, fermented beverages, as well as other products with high nutritional value and protein concentration. However, taking into account the pessimism connected with the economic situation, we have also introduced cheese in large, economic packages. Thus, we will satisfy the needs of those who have recently experienced substantial worsening of their financial standing.
What does the export offer look like? What do foreign consumers appreciate Mlekpol products for?
The export offer of SM Mlekpol is, mostly, products with longer shelf life, such as UHT milk, flavoured milk, and creams, as well as butter, cheese, and a wide range of powdered products that we have been able to expand upon construction of a modern powder plant in Mrągowo.
Foreign consumers value Mlekpol products mainly for their high quality, repeatability, and Polish origin. Through participation in foreign fairs in different parts of the world and talks with current and potential partners from abroad, we can learn their particular needs and preferences. Then we can adapt our offer to the requirements of individual countries, and develop new product categories. Our partners know and appreciate the production flexibility of Mlekpol, i.e. the constant availability of large product batches, as well as timely fulfilment of orders. Such cooperation is possible thanks to our own, stable raw material base and the production capability in 13 modern plants.
Your products reach almost 100 countries worldwide. Which markets are the most promising? How do consumer requirements differ between countries?
The most promising markets are those with insufficient milk production, forced to rely on import to satisfy their consumption needs. These include South-East Asian, African, and Middle Eastern countries. Other markets, equally important to Mlekpol, are China, South Korea, Mexico, Chile, the Dominican Republic, as well as Moldova and Serbia. Consumer needs differ between continents and regions. In developing countries, consumers replace cheaper products – such as rice or beans – with protein-rich goods like milk, cheese, and fermented products. Poorer countries focus on purchase of essential dairy products – e.g. liquid or powdered milk. On the other hand, countries with a high level of economic development show a definitely higher interest in premium products, including long-ripened cheese, butter, and high-protein powdered products for supplementation, such as WPC 85.
What are the current global trends in the dairy industry?
Nutrition trends worldwide are shaped by young people. Within the next five years, the market will increasingly appeal to niche identity needs of loyal customers/investors. A new era of social pressure will begin, as consumers will be increasingly concerned with the ethics of dairy brands, including animal welfare. New generations also want to be in the spotlight, and dairy producers can help them. Besides, we cannot ignore the digital innovations and ways of communication with customer. Over the next 24 months, we can expect that the change in conditions will change consumer habits and lifestyles, such as consumption of smaller amounts of food, buying products with shelf life that will soon expire, or choosing goods in simple packages – not so pretty but of local origin and at lower prices. Consumers will try to reduce food waste and pay much attention to product reuse and recycling. As for older generations, buyers will put much emphasis on health issues, yet innovative food products will also remain important to them. It is, among others, the result of their kitchen creativity and openness to diverse tastes, also from other regions of the world. Buying dairy products will become a way to protect the environment and mental wellbeing, giving the consumers a sense that, by eating dairy products, they are doing something good for their community.
The export hits of SM MLEKPOL are…
Mlekpol’s export hits are UHT milk, powdered products, cheeses, butter, flavoured milk and creams. In view of deep-sea transport and the importers’ distribution capabilities, Mlekpol focuses primarily on products with long shelf life. Globally, the best-known product is Łaciate UHT milk in an environmentally friendly one-litre package. Furthermore, the Cooperative has created such international brands as Milcasa and Happy Barn, which are already well known to consumers in different countries. High-quality raw material and innovative packaging technology ensure that the milk retains its freshness and taste for a long time, without losing its nutritional value. In the cheese category, bestsellers are semi-hard cheeses, including Gouda, Edam, and Maasdamm in blocks, as well as in slices and portions. Mlekpol’s Mozzarella perfectly fits in with the preferences of foreign consumers, including the 2 kg grated version – for the purposes of the catering business. The category of spreads is dominated by Łaciate butter, processed cheeses, as well as Łaciate cream cheeses. For many years, Mlekpol has also exported powdered products, such as milk, whey, buttermilk, and, recently, specialized products, like concentrated whey proteins, e.g. WPC 80 and 85. Specialization of production and modern technologies implemented in production plants ensure more flexibility and possibility of manufacturing dairy products specially customers’ needs. Mlekpol is open to every cooperation and willingly takes on new challenges.
Thank you for the interview.