Anniversary year for Schwälbchen

The small privately-owned German dairy Schwälbchen celebrates its 75th year in business this year by demonstrating that expansion is not always the answer when margins become narrower in the milk sector. Schwälbchen, a group owning a separate cheese production enterprise in the Harz Mountains and a thriving branch delivering dairy products bulk to catering and industrial concerns (Schwälbchen Frischdienst), decided last year to concentrate on its biggest earners within its separate Schwälbchen label retail-supply business. This left the dairy with its Green line range of drinking milk and related fresh products selling on a ‘near nature’ ticket, a popular drinking yogurt brand Ayran, and its flagship product Caffreddo, a range of coffee flavoured dairy drinks.

This restructuring meant milk processed by the Schwälbchen dairy branch has dropped by 18% in 2012 and another 7% in the first half of this year to just 71.53 m kg. But concentrating on the best-sellers (and increasing prices all-round) meant turnover in the first half of this year actually reduced by only 1.1% to € 56.7m.

Performance for the rest of the group, Harz cheeses and Frischdienst, looks like remaining stable this year. But Schwälbchen’s own dairy branch is still in the red despite the restructuring, recording a six-month loss of €390,000 after being €1.1m in the red the previous year. Still, management reports that the new strategy is definitely improving profit margins now. The total Schwälbchen Group reports a turnover of €105.36 m for the first six months of 2013 with turnover in the preceding 12 months at €205.6.