FAGE: The saga of a factory and the price of milk

The inauguration of the FAGE factory in Western Europe, the creation of which is already in its 6th year from the initial announcement, get postponed again and again

According to the financial report of the family dairy industry for the year 2021, the operation of the new production unit in the Riegmeer Hoogeveen business park in the Netherlands will start in the first half of 2025.

It is recalled that in 2016 FAGE had solemnly announced that it was going to build a production unit in Luxembourg, but this plan never materialized.

In November 2021 the company announced that it had signed an optional contract with the municipality of Hoogeveen for the acquisition of a 15-hectare plot of land in order to build a factory with a capacity of 40,000 tons of yogurt.

The $ 170 million investment will be the first of its kind at the Riegmeer-Noord Industrial Park in Hoogeveen and was expected to be operational in 2024.

Already, according to the reports in the financial report, $ 11.7 million have been invested with the entire investment being financed through the company’s operating cash flows.

Decrease in profits with marginal increase in turnover

As concerns the financial year 2021, the turnover of FAGE amounted to 535.6 million dollars, recording an increase of 2.7% compared to 2020 (521.3 million dollars).

By contrast, the net profit of the dairy industry, the products of which reach 31 countries in Europe, Asia, Africa and the Americas, was not positive. Specifically, they shrank to $ 15.8 million from $ 43.3 million in 2020.

Operating profit also fell 37.1% to $ 44.5 million, while pre-tax profit stood at just $ 16.3 million, up from $ 55.5 million in 2020.

The Greek data

Regarding the sales of its products on the Greek market, FAGE first place with a share of 24.3% in volume and 23.8% in value, with its sales increasing marginally by 0.8% in 2021 and by 2.2% by volume.

Its exposure to the domestic market is gradually declining in terms of sales in volume and value.

Specifically, they represented 16.6%, 15.7% and 15.5% of the sales volume of the dairy industry and 15.3%, 15.2% and 14.9% of the sales revenue in value for the years 2019, 2020 and 2021, respectively.

Sales distribution

Its sales in value outside Greece represented 85.1% of its total sales in value in 2021, compared to 84.8% in 2020.

The distribution of sales by geographical area in 2021 was 54.4% in the United States, 30.7% in Europe and other markets, with the largest volume taking place in the United Kingdom and Italy and 14.9% in Greece.

For the year compared to 2020, FAGE sales in the US fell by 1.4% in value and increased marginally in volume by 0.8%, while in the United Kingdom increased by 5.1% in value and by 2.2 % by volume. In Italy they increased by 12.4% in value and 10% in volume in 2021 compared to 2020.

The price of milk

The price of milk used by the dairy industry in Greece increased by 19.3%, while in the US the increase was 11.5%.

In fact, the reduction of FAGE gross profits by 10% in 2021 compared to 2020, to 191.2 million dollars, is attributed to the increase in the price of milk, the main raw material.