The markets in this cluster are in very different stages of development and vary enormously. Overall, the outlook is positive, with a projection for continued rapid growth in dairy consumption, along with good prospects for further investments in the dairy sector.
Japan has shown the highest growth, driven by investments in automation. We see development particularly in the automatic milking segment with the DeLaval VMS™ V300 and the automatic milking rotary, DeLaval AMR™, proving to be successful choices for the Japanese dairy farmers.
In developing markets such as India and in Southeast Asia, we see opportunities to work with Tetra Pak in market and customer development, such as small- to medium-scale investments in producer-distributors of mainly white milk.
Countries with mega farms but without a long history of dairy farming, like China and Russia, benefit not only from products like our heavy-duty rotary system, but also from our advisory services to ensure that customers get the most out of our equipment. This continues to build long-term business relationships. We have a special focus on large multiple farm customers, with key account management and dedicated project planning.
We continue to work with dedicated teams throughout Asia Pacific to secure the aftermarket and services business (AM&S) with all of our milking, cooling and feeding customers. By providing our customers with a full system offering supported by service, advice and by maintaining a special focus on system performance, we have a sound base for our AM&S sales.
Mature farming regions such as Australia, New Zealand and Japan present opportunities to our existing distribution channels and we are actively working to provide new ways of servicing our customers, such as e-commerce. One of the greatest opportunities for us in the coming years is digitalisation – not only commercially on how we communicate with, sell to and advise our customers, but also in technical support and farm management areas.
EMEA (Europe, Middle East and Africa) is a region of very progressive farmers and high-tech solutions. Europe in particular, with its family farms and where space is a factor, will continue to take the lion’s share of the global market for automatic milking by looking at ways to get more from the same herd.
The shortage of skilled labour is a key driver of farm automation. It is clear that our farmers are increasing automation and seeking productivity gains through digitalisation and advisory services. At the same time, European farmers need to turn manure into an asset rather than an environmental problem. Thus, we are exploring the opportunities created by new environmental regulations. Dairy processors are raising their quality standards, which provides significant opportunities in the milk quality and hygiene areas.
Africa is experiencing a rise in large farms and more professional farming methods, even if they still are labour-intensive compared with European farms. We expect growth throughout the continent from our stronghold in South Africa.
The production of fresh milk is growing in the Middle East, an area which is also experiencing a rise in professional farming methods. There is a rapidly growing young population who want to consume like Europeans, meaning dairy products above and beyond traditional yoghurt.
Overall, the Americas represent meaningful growth and brand-building opportunities for DeLaval. Some 180 million tons of milk is produced in the Americas on an annual basis, equalling 25 per cent of worldwide milk production for the dairy processing industry.
In North America, the accelerating consolidation of dairy farms creates growth opportunities for DeLaval, especially in the automatic milking segment. In Latin America, where we are the market leader, the accelerating deployment of technology among dairy producers sets the stage.
Our priorities in the region include success in the high-growth automatic milking segment, especially as larger diary producers (more than 1,000 cows) are considering milking robots.
Since more than 60 per cent of our current sales comes from the aftermarket, we are launching a number of actions to protect this position. One example is to always sell consumables and services contracts in conjunction with the sale of capital goods.
We are also focusing on channel management and development, such as replacing existing dealers to serve our customers better, or expanding the dealer base to ensure sufficient reach. We also need to expand our channels beyond dealers, such as with dairy co-ops in the region.