The story behind Emmi

At the beginning of the 20th century, Switzerland is shaped by growth – including in the agricultural sector. Livestock numbers and milk yields are on the rise, and milk production doubles within the space of 50 years. The dairy sector is becoming more professional thanks to central dairy organisations, dairy merchants and dairies. Farmers also band together to form self-help organisations to boost their power on the market.

The First World War breaks out on 28 July 1914. The war leads to food shortages throughout Europe. In Switzerland, the federal authorities give the Central Switzerland Milk Producers the remit of securing the supply of milk for the Swiss population at stable prices.

It takes some time for life to return to normal in Switzerland after the end of the First World War (1918). Great efforts are made to safeguard the supply of milk and milk products to consumers. 1922 – after the mandate to cultivate grains and root crops (e.g. potatoes) is lifted – the tide turns on the Swiss dairy market: the market is flooded with milk and the opportunities to sell the product deteriorate as a result, not least due to tariff increases and import restrictions by other countries. Within the space of just a few months, the milk price falls by 15 centimes to 19 centimes per litre.

After 15 years of normality, the Second World War breaks out (1 September 1939) and a state of emergency is reimposed.

On the basis of a revised 1947 business article, beginning in 1952 a new agricultural law regulates Swiss agriculture. The provisions governing the dairy sector and their implementation are highly contested, with the dairy industry assuming a key role. The entire milk market organisation is geared towards securing a milk price for producers that covers their costs. Given this key role, the milk price is set by the Federal Council. In return, dairy farmers are required to supply their milk to an official milk collection point or cheese dairy. Butyra and the cheese union oversee the sale of the resulting dairy products. The former organisation additionally controls the monopoly and thus regulates the butter price. Even back then, a price-support fund is needed to offset earnings on the foreign cheese markets, which are too low compared with the Swiss milk price.

After 1945, Switzerland experiences a boom like it has never seen before and it holds strong until the 1970s. Swiss exports increase almost ten-fold during this period. Rising wealth also changes consumer habits, with growing demand for ready-to-eat, pasteurised, sterilised, frozen and pre-packaged foods. Food companies are forced to invest in processing and packaging equipment and thus to produce in larger units.

The collapse of the Bretton Woods system of monetary management (March 1973) and the crude oil crisis (autumn 1973) trigger a global recession. It spells the end of the economic boom that has lasted almost 30 years.

To curtail the milk surplus and prop up the milk price, the individual farm milk quota system is introduced in 1977. The total volume of milk produced in Switzerland is limited to 3.2 million tonnes annually.

The economy is faced with numerous problems at the beginning of the 1990s, and Switzerland is no exception. In an environment of zero growth, rising unemployment and stagnating business confidence, companies have to find new ways to keep themselves afloat.

The members of the Central Switzerland Milk Association (MVL) decide to separate association activities from commercial activities in favour of a modern division-based structure. The company Emmi AG is founded on 23 June 1993 within the framework of an annual general meeting.

On 1 January 1993, the single European market comes into effect, providing a boost to growth. The Swiss population votes against joining the European Economic Area (EEA) in 1992 and consequently is unable benefit from this positive trend. The economy continues to stagnate until 1996. Major changes are ushered in for the Swiss dairy industry when the Federal Council elects to reduce the milk price to 10 centimes while at the same time increasing direct payments to farmers.

As part of the bilateral treaties with the European Union (EU), the 2002 agricultural policy aims to improve the competitiveness of the Swiss agricultural sector. The agreement between Switzerland and the EU on trade in agricultural products enters into force in 2002. Trading in cheese sees the biggest changes as a result of the new accord. Between 2002 and 2007, both parties reduce customs charges on an incremental basis, and from June 2007 the movement of cheese goods between Switzerland and the EU is duty-free. Since then, all border protections towards the EU for Switzerland's most important dairy product have been lifted. The domestic subsidies for the sale of cheese in the Swiss market are paid out for the last time in 2002. The export subsidies for cheese exports outside the EU remain in place until 2008, albeit at a continually declining level. This creates considerably more challenging conditions for the Swiss dairy industry as a whole.

Since the turn of the century Swiss politicians have been weighing up whether or not to scrap its system of milk quotas. This is prompted by an earlier announcement by the European Union (EU) that it intended to review its quota system in 2003 and abolish it by no later than 2008. In 2003, the decision is made to exit by 2009. In the wake of the abolition of the milk quota system, milk volumes rise – and continue to do so until 2014. As the milk price falls, milk volumes stabilise in response to a slightly lower level. The number of dairy farmers sees a continual decline. In the EU, incidentally, the milk quota is not scrapped until 1 April 2015.

For several decades, Emmi's international business had focused on exports from Switzerland and licence agreements abroad. The resources associated with this abroad were manageable. Since the turn of the century, however, an increasing number of larger stakes in foreign production sites have transformed Emmi into an international corporate group. Since the beginning of 2014 the new Group structure takes into account market opportunities, the importance of the Swiss domestic market and the increasing internationalisation of Emmi. The vision of Emmi as an independent company maintaining its position in open markets for the duration remains unchanged. Similarly, Emmi's three strategic pillars will also remain intact: (1) Strengthening its market-leading position in Switzerland, (2) Targeted international growth, (3) Rigorous and long-term cost management.

While Emmi continues to optimise its brand and product portfolio, drive forward innovations and strong brand concepts, and thus strengthen its leading position in the Swiss domestic market, it is also pushing ahead with its international growth. Its international presence allows it to diversify geographically, exploit synergies and economies of scale, and participate in growth. In order to be able to invest in sustainable growth and innovation, Emmi pursues rigorous cost management throughout the Group. In addition to these three main pillars of the strategy, Emmi is investing in the development of attractive niches such as organic and goat’s milk products and desserts.

The Emmi Group has been pursuing a focused and disciplined portfolio transformation strategy for many years. Acquisitions have consistently played a key role in strengthening market positions and accelerating organic growth. Over the past 30 years, Emmi has completed 45 acquisitions, successfully integrated them, and continuously developed its portfolio beyond Switzerland. The strategic focus is on four selected niches and markets in which Emmi has strong expertise, a relevant market position, and the ability to drive profitable growth.