Sustainable products on course for growth
In 2019, the Uelzena Group built on the previous year’s success and further expanded its raw material base along with its production capacities. The fact that this growth relates to more than simply quantity is reflected, for instance, in the rise in the VLOG-certified proportion of raw milk or in the increased orientation towards higher-priced products. By participating once again in the sustainability module milk, the Uelzena Group remains consistent in its approach to more sustainable milk production.
As a medium-sized company, Uelzena needs to hold its own against a number of strong competitors in the market. This means it is vital to grow to such a scale that ensures its economic success into the future. Increasing sales volumes in the main product groups have validated the adopted strategy: Overall, sales were increased by 5.5 percent in the reporting year. The various value-added measures for individual product groups were also improved.
Milk from the region
Milk is, and remains, the primary raw material for the Uelzena Group. This makes it all the more gratifying that its own milk proportion could be significantly increased in 2019. New members joining the cooperative – about 50 new milk-producing companies – accounted for some of this increase. These new members, as well as the measures taken to increase volumes from existing farms, meant that the received quantity of raw milk reached nearly 636,000 tonnes, which is an increase of almost 21 percent.
In this context, it should be noted that the additional quantities of delivered and processed raw milk came from local regions. Specifically, almost all milk-producing companies are within 150 km of the Uelzena sites. Sourcing raw materials from the immediate vicinity has been a key sustainability principle for the Group for many years. It saves transport costs and reduces CO2 emissions.
The Uelzena Group already adapted to the German market requirements in 2018 with regard to GMO-free products. At the Bismark site, milk producers in the collecting cooperatives switched to GMO-free feed. Since then, cheese has been produced here from raw milk that complies with VLOG requirements (VLOG – Germany Association of Food without Genetic Engineering). In 2019, the VLOG-compliant proportion was 73 percent of the total raw milk delivered.
.Greater added value means greater sustainability
As a result of the high volumes of raw milk, the Uelzena Group has been able to make the best use of its capacities for milk products. This high raw material volume has expanded the sales market and made it possible to access new markets. The main product groups gained 12,780 tonnes over the previous year, which is a growth of 5.5 percent. Milk powder proved particularly successful with a growth in volume of almost 8 percent. In addition, Uelzena increased its milk fat sales by 6 percent, thereby continuing its growth strategy in the core segments. Sales in the health product and instant beverage divisions were also encouraging.
A second round of the sustainability module milk
In all its focus on growth, the Uelzena Group does not simply wish to process more milk, it wants to produce the milk as sustainably as possible and meet the highest quality standards and increasing customer demands.
By participating in the QM sustainability module milk, Uelzena supports its wish to source milk raw materials as sustainably as possible. Right from the start in 2017, the company was determined to support this project. The results of the first round were evaluated in 2019 and promise interesting insights and opportunities for optimisation, while also showing specific needs for action. The second project phase starts mid-2020: Together with the Thünen Institute and QM Milch e. V., Uelzena will drive data collection for an additional three years. The data is required to initiate an improvement process for more sustainable milk production. The project also creates transparency, thereby contributing to social acceptance. Further information: QM sustainability module milk 2.0
Besides milk, the Uelzena sites also process raw materials such as cocoa and instant coffee which are not produced locally but in countries referred to as risk countries (according to the BSCI definition). The aim is to commit suppliers and manufacturers from those countries to a common standard that applies to the entire supply chain. As things stand in 2019, about 60 percent of suppliers from these regions not only fulfilled the requirements of the Ethical Trade Initiative (ETI), they were also audited for further standards such as SEDEX, BSCI, TSF, SA800 or Fairtrade. However, there is limited scope for further improvements as several customers maintain solid partnerships with suppliers, in turn making these binding for Uelzena, or limiting any further development due to functional restrictions.
Greater food safety through the “food fraud” process
Unfortunately, food, raw materials, ingredients or packaging materials continue to be deliberately mixed up, mislabelled, adulterated or imitated. The German Federal Office of Consumer Protection and Food Safety (BVL) uses the following definition for food fraud: “Food fraud is generally understood as placing food on the market with the intention of financial or commercial gain through deliberate deception.” The Uelzena Group established its food fraud process in 2018, which aims to counteract any attempts to commit fraud in the supply chains. Since 2019, a new team within the company has evaluated and documented the relevant risks and processes. Uelzena thereby meets all the requirements of the IFS Food Standard, which is defined by the Global Food Safety Initiative (GFSI) – and can therefore present another quality seal that distinguishes the company from its international competition.
"Our continuing participation in the QM sustainability module milk demonstrates that we are consistently following a holistic sustainability approach in milk production and can highlight the sustainability efforts of our milk producers for our customers."
Nanke Brümmer, Sustainability Manager, Uelzena
Future-oriented packaging solutions
The new packaging law came into force across Europe in January 2019, targeting the disposal of environmentally friendly packaging. Since then, companies that bring filled packaging into circulation have been obliged to take this packaging back to recycle. As the majority of Uelzena’s products are delivered in Big Bags to business customers, who then manufacture and market the end product, the topic of packaging only affects a small part of the Group’s product range. Customers’ awareness of packaging issues is constantly growing, especially in the instant beverage sector, and so the Group has been working hard for some time – and even harder since the introduction of the packaging law – on issues of eco-friendliness and recyclability to support its customers in this area.
Together with its customers, and for its own consumer goods, the Uelzena Group is continually exploring biodegradable materials from renewable materials from composite tins to corrugated boards and other diverse options to introduce new future-oriented solutions. The aim is to create more eco-friendly packaging based on an approach to avoid, reduce, and improve. For instance, some packaging material is used that facilitates high-quality recycling as part of the aspired materials cycle. In the long term, the company aims to continuously improve its packaging. In the instant beverage division, Uelzena is already working with a composite foil containing no aluminium.
Outlook for 2020
In 2020, the Uelzena Group will try to press ahead with all the above topics – despite the current conditions due to the COVID-19 pandemic – to continue offering its customers innovative, high-quality and sustainable products. However, the overriding topic will be to steer the company safely through the pandemic, keep it largely on course and secure milk processing and jobs.
It is not possible to predict at present how serious the consequences of the coronavirus crisis will be for the company. What is certain is that the pandemic will involve considerable adjustments and losses in all business divisions.
The modern production of food involves divided responsibilities and comprises several stages. At the heart of this process is the further processing of agricultural raw materials into intermediate products and ingredients. This is the core competence of the Uelzena Group and its subsidiaries. In 2019, the Group alone procured 729,664 tonnes of milk raw materials as well as other agricultural raw materials such as sugar and cocoa.
From all of these raw materials, the facilities in Uelzen, Ratzeburg, Bismark and Warmsen predominantly produce intermediate products and ingredients. Customers are the industry, catering services and food retailers. Moreover, the Uelzena Group also produces products for the final customer (e.g. Butaris) as well as ready-to-eat products on behalf of its customers (private label).
Due to its dual function as a purchaser of agricultural raw materials and as a processor, the Uelzena Group is aware of its multiple responsibilities:
- for the health of the consumers that want to buy high quality and safe food
- for the economic viability of the farmers who depend on reliable buying of their agricultural raw materials
- for the environment and the welfare of farm animals
- for the respect of human rights, which is particularly important for agricultural raw materials sourced from non-European countries.
High quality and safe products and reliable purchasing of agricultural raw materials are by tradition important topics for the Uelzena Group, and which have always been carefully managed within the company.
The action field products comprises several sustainability topics, which are important for the stakeholders of the Uelzena Group. Customers, members and suppliers are interested in sustainable and reliable sourcing, customer health and safety, labelling of products and a strategic focus on growth markets.
By applying various strategic objectives and coordinating measures, the Uelzena Group strives to maintain and possibly improve the already achieved level. In doing so, the Group is pursuing a continuous development process, for example, by gradually identifying possible sustainability risks in its supply chains. For milk raw materials, for example, the sustainability module milk provides the basis for that. Using a continuous improvement process, data is collected and analysed and weak points are identified in order to develop objectives and measures. The overall goal: constant improvements aimed at a sustainable milk production. Added to that, the Uelzena Group is setting up sustainable supply chain management for important non-milk raw materials including cocoa, sugar and coffee creamer.
Our sustainable product strategy – targets and measures
- The Uelzena Group endeavours to continue to improve the added value of all its product groups.
- The production of safe and high-quality products on a long-term basis should be guaranteed.
- The range of sustainably sourced raw ingredients and materials should be expanded. The Uelzena Group is using increasing customer demands for sustainability as a reference.
- The process-focused quality management system systematically accompanies all processes, checks for errors and ensures that product specifications are complied with.
- The Uelzena Group has been certified according to the most important schemes: ISO 9001/2015, IFS Food (higher level), BRC (British Retail Consortium), Fair Trade, UTZ, EU Eco regulation, Kosher and Halal upon request.
- Our laboratories operate at high-end chemical-physical standards, which for example include specific test methods on the structure of particles. The laboratories are certified according to ISO 17025.
- Risk-based quality control plans with defined sampling schedules are in place for all raw materials, intermediate and finished products. This process ensures that the defined microbiological, chemical-physical and sensory product properties as well as quality parameters are complied with.
- HACCP management includes allergen management, computer-aided maintenance and repair, foreign matter management, a hygiene concept (zones and requirements) as well as pest control.
- Suppliers are inspected by requesting specific information, on-site visits and supplier audits. Raw material specifications must be available for each raw material. Moreover, the Uelzena Group produces its milk-based ingredients and products exclusively from milk raw materials that stem from Germany or the European Union.
- Risk technologies such as genetic engineering, nanotechnology or irradiation are, in general excluded.
- Packaging materials as well as food contact materials and articles comply with German and European regulations. Added to that, supplier declarations of non-objection according to Regulations (EC) 1935/2004 and 10/2001 are available for these materials.
- In order to further improve the high quality and hygiene standards of the Uelzena Group, a new automatic gantry for the transport of products between the storage facilities and the production area was erected at the Uelzen site. Repacking onto plastic pallets reduces the impact on the environment, the risk of intrusion of foreign matters (such as wooden splinters) and the external contamination of the production areas. The lock concept was also expanded, which now allows the different product streams to be better segregated. This prevents allergens that are subject to labelling such as milk powder to get into other products (for example, yeast).
- The Uelzena Group controls its suppliers on the basis of risks. Should any information be conspicuous, our buyers reserve the right to have it checked by auditors directly at the suppliers' companies.
- Since 2016, the Uelzena Group has been working step by step on the development of a sustainable procurement management programme. All procurement materials have been analysed and future strategic priorities defined based on these findings. The most important agricultural raw materials are: Milk raw materials, sugar, cocoa and coffee creamer. For these materials, a management approach was developed and passed which includes several stages: Analysis of potential sustainability risks, supplier dialogues, definition of requirement and risk-based reviews of compliance with the requirements.
Sustainable sourcing: milk raw materials
- 89 percent of our milk raw materials came from regional producers (as of 2019). The agricultural companies producing the milk are located within a radius of less than 150 kilometres around the Uelzena sites.
- A requirement for milk delivery is adherence to the national standard for producing milk, QM Milk. This is used for quality assurance in milk production and comprises 69 criteria. In addition to hygiene management, criteria also relate to species-appropriate animal husbandry, the responsible handling of veterinary medicinal products, the working environment and feed safety. Dairy farmers are audited and certified on site at regular intervals.
- Sustainability data on milk production has been collected via a survey since 2017. This survey at farm level is based on the sustainability module milk (Thünen Institute, QM Milch e.V.), a science-based questionnaire containing more than 80 ecological, economic, social and animal welfare criteria. The second project phase starts mid-2020 and the Uelzena Group will participate again as a practice partner. See also: sustainability module milk.
- Milk producers that produce GMO-free milk according to the VLOG standard must show a relevant certification. An “Ohne Gentechnik” (GMO-free) certification means that food is not itself comprised of genetically modified organisms (GMO), does not contain these and must not be produced from these. In addition, no components that have been produced via genetic engineering may have been used during production. For animal feeds such as milk or cheese, these can only be certified as “ohne Gentechnik” if the animals have not been fed with genetically modified crops. Risk-based inspections and feed analyses are carried out on the farms at least every three years.
Sustainable sourcing: labour and human rights
- Customers of the Uelzena Group shall be given the opportunity to select whether they use conventional or sustainable non-milk raw materials such as cocoa. Sustainable raw materials comply with internationally acknowledged sustainability standards such Fairtrade, UTZ, Rain Forest Alliance and Organic.
- Compliance with labour and human rights is a high priority for the Uelzena Group and is laid down in the company's Code of Conduct.
- Therefore, the Uelzena Group requests transparency from its suppliers when they sell raw materials from sensitive countries of origin in Asia, Africa and South America. The buyers at the Uelzena Group request self-disclosure from their direct suppliers in Europe – in most cases intermediaries or processors – confirming that the companies observe human and employee rights in accordance with the requirements of the Ethical Trading Initiative (ETI). In 2019, about 60 percent of suppliers from these regions not only fulfilled the requirements of the ETI, they were also audited for further standards such as SEDEX, BSCI, TSF, SA800 or Fairtrade. New suppliers provide the required information and data via an online supplier portal. Gradually, the suppliers’ suppliers shall be included as well – along the supply chain back to the origin. In line with the further development of sustainable procurement management, more sustainability aspects from the suppliers may be requested.
- The Uelzena Group is a member of SEDEX, a data platform where companies share information on the results of SMETA audits. SMETA is an ethics-based audit format that provides information on the four areas defined by SEDEX: work, health and safety, environment and business ethics. The Uelzena Group has also been audited for a number of years and can therefore present its customers a SMETA 4 certificate confirming compliance with ethical, labour and environmental standards.