News: German dairy giant DMK is seeking to expand its baby food division through the acquisition of local food manufacturer Sunval from German private equity firm BWK for an undisclosed amount. Sunval's sales increased about 36% year-on-year to EUR37mn (US$45.6mn) in 2011. DMK aims to strengthen its baby food division with the acquisition of smaller competitors such as Sunval.
BMI View: Dairy products retain a high prominence within German diets despite the dramatic changes that German dairy production has seen in recent years. While the volume of German milk production has generally demonstrated an upward trend since 2001, the value of milk production has, until recently, continued to display marginal decline. The sector has seen a considerable degree of consolidation, and while output has grown, the number of individual businesses producing this output has decreased. To offset the risk of long-term decline, German dairy processors have been exploring ways of differentiating themselves, with strategies such as product innovation being a focus.