Since the Swiss cheese market began to be deregulated, Emmi has faced increased competition in the domestic market. To secure long-term growth, the company plans to raise its international sales from less than a third of overall turnover to a half by 2014.
Buying Fromalp from the German firm Hochland is a step on the road to that target.
Fondue and raclette
Emmi said it is not currently in a position to significantly increase exports of fondue and raclette on its own. The acquisition of Fromalp, which generated sales of some CHF 100m in 2009 with a 40 per cent export share, will help boost the export of these cheeses, while also supporting Swiss milk sales.
Emmi said the value chains of Emmi and Fromalp are largely identical so integrating the two businesses will increase efficiency and reduce costs.
The Swiss cheese firm said combining the two businesses could mean that some Fromalp production could be relocated over the next few years to other Emmi sites. If production is relocated, Emmi said it is confident of being able to continue to employ the Fromalp employees affected at its facilities.
Emmi said the synergies and economies of scale gained through the acquisition will give it the financial leeway to cover the marketing and export costs necessary to establish brands internationally.
Urs Riedener, Emmi CEO, said: “The integration of Fromalp’s international business will allow us to market specialty cheeses even better internationally, which will also benefit the Swiss dairy industry,”
Riedener said Emmi is also well positioned to take the fondue and raclette cheeses into international markets. “Emmi is an established player in the agricultural sector and is a more credible exporter of Swiss cheese than a foreign company.”
As for the financial details, both parties have agreed not to reveal the purchase price of the acquisition but Emmi did say that it will finance the acquisition using existing funds and credit lines. The transaction will be completed subject to approval by the Swiss Federal Competition Commission.
International investments
The acquisition of Fromalp follows the announcement from Emmi in December of its purchase of stakes in packaging specialist Diprola in France, and Venchiaredo, an Italian fresh cheese and mozzarella maker.
Emmi said the investments would enable the company to grow strongly in both Italy and France in line with its international growth plans.
Explaining further the broader target of increasing international sales, Emmi said that since the Swiss cheese market began to open up in 2002 imports have grown at a faster rate than exports.
Over the past five years, it said imports from abroad have risen by almost 30 per cent, while international exports have increased by just under 10 per cent. During this period, Switzerland’s cheese trade balance has fallen by almost 4,000 tonnes.