#FoodUnion launches digital tool for #Latvia dairy industry

| June 6, 2019

Since their emergence in 2012, pan-European dairy and ice cream company Food Union have placed an emphasis on consistent innovation to maintain their place at the top of the industry. The latest example comes in the form of the interactive platform Smart Dairy Farmer, introduced in May with the stated goal of helping the Latvian dairy industry become more efficient, more innovative and more technologically advanced.

Food Union’s owes its current status as an innovative, market leader in part to the support of founding investor Meridian Capital Limited. Meridian Capital is an international investment firm headquartered in Hong Kong with a diversified investment portfolio spanning consumer goods, real estate, hospitality, infrastructure and natural resources.

In 2003, Meridian helped back a management buyout of a Unimilk, a dairy company in Russia. Askar Alshinbayev, founding partner of Meridian Capital Limited, was a Board Member of Unimilk from 2006 to 2010 and was central to its development from 3 dairy factories into the #2 dairy company in the CIS and thereafter its merger with Danone Russia.

Building on the success of Unimilk in Russia, Meridian Capital Limited backed long-term partner Andrey Beskhmelnitsky who in 2011, consolidated the production capacities of two Latvian enterprises to create Food Union.

Today, a strong connection to the group’s suppliers, which include hundreds of farms in the European dairy belt, underscores Food Union’s commitment to high standards and fine raw milk. By creating the new digital tool Smart Dairy Farmer, Food Union has cemented its relationship with its suppliers. It is the first of its kind in the digital environment for Latvian farmers and is proving infinitely useful in keeping track of and analysing data on milk sold for processing and thus efficiently planning farm resources and operations.

Harijs Panke, deputy chairman of the Board at Food Union Group’s company Rīgas Piena Kombināts, expands on this strong, newfound relationship: “Transparency, traceability and loyalty are integral part of the dairy industry, so by sharing the data in a convenient and easy-to-use way – features that are at the heart of the new platform – we become more open as an organization, while our partners, the best farmers in Latvia, become even smarter and more progressive. This is an essential contribution to our mutual relationship. At the same time, it also sets a new standard for dairy business management and raises the industry, based on centuries-old traditions, to a modern level, also raising the bar higher not only for dairy farms and companies in Latvia, but also in the neighbour countries. I am calling on every user of the new tool to be active and give us feedback on its operation and desired improvements so that its functionality becomes even more handy and useful.”

Far from resting on any laurels, which could inevitably come from an annual turnover of €280 million in 2018, Food Union continues to innovate and seek further success. It occurs domestically where relationships with suppliers continue to strengthen through technological advancements such as Smart Dairy Farmer but also further afield where, last year, Food Union began production in two newly completed dairy factories in China off the back of Meridian Capital’s $55 million investment.

The new platform offers farmers, who have developed long-term co-operation with Food Union, access to crucial data such as the quantity of milk sold and the quality of its components, including milk fat and protein content. Farmers can also keep track of financial data with the help of the tool, including data on payment amounts the farmer has received and the total amount of milk sold, as well as his or her average milk price and how it correlates with the average market price.

More information on the release of the platform.

In seven years since its creation, Food Union has become one of the largest dairy and ice cream producing groups in Central and Eastern Europe with more than 2500 employees, factories in nine countries and suppliers which include hundreds of farms in Europe. The company exports to more than 25 countries, with the main markets being the Baltics, Norway, Denmark, and Romania.

Meridian Capital Limited has been a key partner from the start with responsibilities distributed as they had been in the Unimilk days. Over and above Meridian Capital’s financial commitment, managing partner Askar Alshinbayev deals with finance, investor relations and corporate issues.

The group entered China in 2015 with PAG, one of Asia’s largest private equity firms, investing $170 million alongside Meridian.

Commenting on Meridian’s investment of a further $55 million in 2017, Askar Alshinbayev, said: “Entry into China, which has one of the largest and fastest growing consumer markets in the world, is a significant step for Food Union. We are confident that working alongside with PAG, we can deliver on our strategy to manufacture European quality dairy products which demanding Chinese consumers can enjoy and trust.”

The Meridian Capital and PAG investment in Food Union was named Baltic Private Equity/Venture Capital Deal of 2017.

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