CEO in the ‘Champions League’ of the dairy industry

We speak with Roelof Joosten, CEO of FrieslandCampina, about his time as a student in Groningen, his career, the plans of FrieslandCampina, promoting pasture milk, the impact of the Russian boycott and his advice for current students. Joosten will give a lecture on Thursday 3 September, 2015, during the festive opening of the academic year of the Faculty of Economics and Business and Faculty Association EBF.

You studied Chemical engineering at the University of Groningen. Why this programme?

Initially, I did not want to study Chemical Engineering. I actually wanted to study medicine but was eliminated by lottery. I could not see myself sitting behind a desk and I chose a more business oriented study programme, with Chemical Engineering as my eventual choice. So it is really a coincidence that I ended up there. In addition, I also studied Business Economics. This combination of Chemical Engineering and Business Economics is called Industrial Engineering Management nowadays. In those days, I had to put my own combination of subjects together.
Last year I also took a Harvard executive course. That was a special experience.

How do you look back on your time at Groningen?

With a great deal of pleasure. I really had a very nice and exciting time there. Actually, I was quite sad to leave. Now occasionally I can come back because my two children are studying in Groningen and I must say that not a lot has changed. Besides my studies I also rowed races for a while and sat on the board of G.S.R. Aegir. Furthermore, during my student days I was involved in setting up Integrand that still exists till this day.

Could you maybe tell us something about your own career and how you got to where you are now?

When I graduated I still had to go and do my military service. Though not for a long period of time but I was an officer in the army. I then got offers from Shell and Unilever. Eventually, I chose the latter because I had also taken a Summer Course there. At that time Unilever had next to the B2C also a strong B2B department. In view of the fact that during my studies I had developed more affinity with B2B and as I also graduated as a B2B-marketeer it seemed a logical choice to go for a commercial position in the B2B environment. And so I began a two-year traineeship at Unilever in 1985 and afterwards I fairly quickly landed myself in management positions. I worked in various countries. In Germany for the sale of catalysts, in Gouda in the processing of derived products from oils and fats, and in England.

After my time in England, where I also gained my first board experience, I also worked for Quest. There I was responsible for the commercial activities in Europe. Yet, I finally chose a typically Dutch company. In 2004 I got into touch with Friesland Foods that besides fast moving consumer goods also had a B2B department. I was able to put to good use the experience I had gained in the change the company wanted to make from being commodity-driven to more added value products. The production of whey, a by-product in the production of cheese, that was then in its infancy stage, has since developed into a high-quality ingredient of baby food. Now, FrieslandCampina, after the merger of Friesland Foods and Campina, plays its role in the ‘Champions League’ of the dairy industry with the production of whey. Having been COO of FrieslandCampina Ingredients for a while, I was asked, after Cees ’t Hart announced his departure, to be CEO of FrieslandCampina. That was in June of this year.

On your website you talk about Strategy route2020, could you tell us a bit more about that?

Friesland Foods and Campina merged at the end of 2008. This merger resulted in one of the biggest dairy corporations in the world and a dairy enterprise that belongs in the top 6 of the world. With a view to the disappearance of the milk quota in April 2015 and an expected growth between 2010 and 2020 of the amount of milk produced by the members of 2% on average per year, there had to be a strategic plan.

Route2020 really asks the question what the essential applications are that really make money for our farmers. We have focused on baby food, milk drinks, brand cheeses, basic products and a clear geographic spread. By doing this the company can pay out part of its profit on top of the guaranteed price to the member dairy farmers. The guaranteed price is based on a weighted average of the paid-out milk prices of reference companies in surrounding countries. This way the members receive a higher milk price.

At the moment, the Russian boycott, the lifting of the European milk quota and disappointing demand from China result in a milk price that is below cost price for most farmers. What is your opinion on this issue? Should the Government intervene or not?

The last thing we want is Government interference. The Government must ensure the existence of a free market. Therefore, only wanting to buy national products is a bad thing from a European perspective. If a market such as Russia closes then there are consequences. The milk that not only originates from the Netherlands, but also from other countries and is destined for Russia, will have to go somewhere else after all. In addition, Chinese demand is lagging behind and in contrast to other years the climate in other milk producing regions is favourable. Coupled with the ending of the milk quota in April of this year this means that right now milk prices are under pressure. The diary market has developed into a world market and is much more volatile than the strongly government regulated market. In the long run we think that demand will exceed supply.

You indicate that the population will grow and that demand for milk will increase. At the same time you promote pasture milk. What is your view on that for the future? Will there, for instance, be many more mega stables to produce more milk?

The average Dutch dairy farm has 85 cattle and is family-oriented. With a growth of 2% per year you will, in 2020, eventually get to about an average of 100/105 cows. There will be dairy farms with 200 cattle or more, but these are often partnerships providing a living for several families. Also, from 1 January 2016, dairy farmers, who enlarge their farm and as a result will produce more phosphate (as part of manure) than they did in 2014 must show, each year, that they have sufficient land. This last point might help our ambition that in 2020 80% of all Dutch cows will graze in pasture. After all, this is what the consumer likes to see and what we as a dairy enterprise will keep on promoting with a pasture premium. The consumer can help in this effort by buying more dairy produce with the pasture milk logo.

What are your objectives for the future?

That we, as a business, are able to get a good price for the milk of our member dairy farmers and thus contribute to the continuation of their businesses. In addition, we want our employees to put in maximum effort. For as people keep on developing themselves they are able to improve the environment they are active in and thus of course also the company. Eventually, we, as a business, may be able to contribute to feeding a growing world population.

As the CEO I really would like to give everyone in FrieslandCampina the opportunity to develop themselves and to fully enjoy our achievements as a company.

Finally, if you look at your private life then you want your family to thrive in the hectic life I lead, and that my children and my wife can also develop as well as possible.

What message would you like to give the students?

Students should take care to explore the boundaries of their ability and possibilities. Go beyond these boundaries and learn where your talents lie and what your strong and not so strong points are. Learn from your mistakes and focus on what you are good at. In addition, as a student you must be bold and put things up for discussion. Don’t take everything for granted. Finally, make sure that you are not only involved in your studies but make sure that you get to know yourself by doing extra-curricular things. That’s the way I have always done it.