Responsible operations and well-being products are key competitive advantages for 2017

A series of meagre years for Finnish dairy farmer entrepreneurs and Valio Ltd continued in 2016 but the downward trend has stabilised. The weakness of the dairy sector was primarily due to the imbalance in global markets. The Russian market remains inaccessible, demand in Asia continued to be poor, and the oversupply of milk in the EU is ongoing. The Finnish market is subject to fierce competition from imported products. Despite the challenges, Valio was able to pay its owners, Valio dairy farmer entrepreneurs, around 8 cents above the European average per litre of raw milk.

Valio mapped the dairy product markets in different countries, seeking new potential export markets for our consumer products at feasible prices. We increased consumer product exports to Sweden, the United States and Denmark through our subsidiaries. Milk powder sales have started online to consumers in China, and we began to export baby food, excluded from the embargo, to Russia.

On nearby markets, the subsidiaries performed favourably with net sales up in Russia +8%, the Baltic States +9%, Sweden +4%, and Denmark +11%.

Valio continues to target export growth in lactose free products and cheese in Sweden and Denmark, while in the US the focus is on increasing the sales of consumer cheeses and butter whether imported from Finland or produced locally. In Estonia, Valio is the market leader in fresh dairy products, and manufactures fresh dairy products and cheeses for the Baltic markets from local milk. Valio has a processed cheese plant in Russia that makes Viola® processed cheese and also packs matured cheeses. Fresh dairy products for the Russian market are manufactured for Valio by subcontractors.

Responsible well-being

Special products and concepts that promote well-being plus the cleanest milk in the EU define Valio’s competitive advantages both in Finland and on export markets.

Lactose free Valio Eila® products, and Valio Gefilus® products containing the world’s most researched lactic acid bacteria, benefit stomach well-being and are export leaders. The ValSa® milk salt concept has progressed to commercialisation. The expansion of our range of tasty snack products with less sugar continues in Finland with the new snacks plant in Riihimäki starting production this year. Demand for organic products is expected to increase and for protein-rich products will probably remain strong. Valio launched 126 new products in 2016, including Valio MiFU® cooking crumbs, a completely new kind of product that became market leader as a new type of protein source for meals.

There are some signs of the beginning of an economic recovery in Finland and Europe, which will increase investment in food quality rather than buying the cheapest option. By global comparison, Valio manufactures luxury class dairy products from GMO-free raw milk whose production is virtually soy free and adds no unnecessary antibiotics. Food prices in Finland are the lowest among the Nordic countries (source: Eurostat 2015) and hopefully consumers will heed quality rather than price alone.