Sino-Dutch Dairy Development Centre

SDDDC News

Home > News  > SDDDC News

SDDDC· Ten Lessons | Lesson 6. Portfolio management

2021-1-26 15:04:07 Comments:0 Views:158 category:SDDDC News

“Do not put your eggs in one basket” 

--Warren E. Buffett 

Milk is generally processed into many different dairy products, which are sold to consumers. During the pandemic outbreak, the value of well-balanced portfolio management has become quite clear to dairy processors. One single portfolio makes a company vulnerable. There is for example a cheese producer selling 80% of its products to little cheese shops in big cities which mainly have tourists as their customers. Because of the lockdowns, tourists stayed away and sales dropped by over80% in many countries. 


Extreme examples were seen in Spain, but also in the Netherlands and Italy. Some food producers have a chain of shops in big cities as their main route to market. If 90% of the sales are covered by dedicated food stores in cities, in which again 90% of the shoppers are tourists, the sales will drop dramatically by 80% or more. The costs of the prime locations and employees continue but no cash comes in. This could be dealt with for a few weeks or months, but a longer period will bring even the most robust business close to bankruptcy.

Buying locally produced food has been a trend for many years already. In more rural regions, such as Uganda, Ghana andTurkey, this is already quite common practice. This in contrast with fast-growing cities like Mexico City, Jakarta, Lagos or cape Town, and large cities in China. Western junk food is getting more and more popular in these cities and with this, the dependency of ingredients rises for this type of food.

Tips

The key learning from this is therefore that profitability is an important KPI, but robustness as important a broad product makes it less vulnerable.

发表评论共有0访客发表了评论

    暂无评论,快来抢沙发吧!

我来说几句吧

验证码: 看不清楚?