Milk and dairy products have been intrinsic to the human diet for millennia. Nowadays, dairy is added to all kinds of food products after processing to provide nutritious and delicious food for human consumption.
Primary dairy products – milk, whey, lactose, cheese, protein powder – can be processed and consumed in myriad ways. They are ready for immediate consumption or they can be added as ingredients into milk drinks, processed cheese, bread, cake, biscuits, noodles, candies and supplements. Different dietary needs come with their own set of standards. This creates room for innovation through research and development (R&D).
One-stop dairy product supply chain management service
HKSTP partner company Valfoo Asia Pacific Limited is a Swiss technology and supply chain management company with vast experience in the development and the production of milk and whey derivatives. The company specialises in the R&D of formulation and production of all types of dairy ingredients and derived products. It also provides recommendations for improving products or developing new products.
Valfoo’s managing director Dr. Daniel Krayl set up the company in 2009 with his younger brothers and moved into Science Park in 2014. The company concentrates on business in Europe and mainland China.
The name Valfoo is formed from two English words, “value” and “food”, reflecting the founders’ philosophy and mission of producing high-quality food to satiate the world’s needs and contributing to better human health and quality of living.
Tapping promising Greater China market from a Hong Kong base
Although the family has a strong connection and history in the European dairy industry, the brothers who majored in economics, law and business management had never considered running the family business until Daniel’s youngest brother came to Hong Kong as an exchange student at the turn of the century. Daniel came to visit his brother and later decided to study Chinese in Shanghai. Both perceived tremendous business potential in Hong Kong and Greater China.
After exploring for a few years, they decided to make Hong Kong their base to launch their careers. Conscious that they were more familiar with the ecosystem and networks linked to their family’s business, they chose to make dairy product processing a starting point.
Building a comprehensive supply chain and production network
The Krayl brothers have leveraged their experience, network and hard work to establish an R&D base and operational offices in Hong Kong Science Park and Technopark in Zurich, Switzerland. While the company doesn’t have its own factory or production facility, Daniel explains that they have connected with farmers and dairy product suppliers in different parts of Europe, as well as partners who specialise in product processing.
Staying true to the principle of producing quality formulas, Valfoo focuses on the quality of the raw ingredients, product development, quality control and logistics efficiency and appoints the production of dairy products to the right partners.
Daniel likens the model to smart phone production. Valfoo’s role is planning and managing the whole process, including design (in this case, the formulas), raw materials and parts procurement (dairy product sources), licensing of third-party producers to carry out production and connecting with logistics companies to transport raw materials, parts and finished products.
Fine-tuning products based on customer needs
He says that Valfoo’s competitive advantage is in supply chain management knowhow and experience, and in selecting various raw materials to produce suitable dairy products.
For example, when China’s producers want to make a new type of yogurt and order raw ingredients such as whey protein from Valfoo, the company will consider various factors. Do the target consumers want to have a thicker or thinner mouth texture? How long does it take to ship the products from Europe to China? Is goat’s milk or cow’s milk a more suitable ingredient? Different protein level, sources or organic raw materials which have become a hit in recent years will also take into consideration. A recipe using one or the other ingredients to deliver a taste profile will be designed that suits local preferences, and make sure it stays fresh for long periods. Products will be produced under strict quality control and management to meet the highest possible standard. They will also map out the best delivery routes, ensuring the products and supply chain meet customers’ needs.
Science Park labs support R&D
Valfoo has four R&D professionals and 2 of them are based at Science Park. Their roles are not only responding to customers’ requests and carrying out R&D on localized dairy product formulas, but also testing products to comply with local market standards.
Daniel points out the co-working labs at Science Park have been very useful for their testing and R&D work as it helps to share advanced equipment which are less frequently used.
As well, they need R&D talent. Through HKSTP, the company is able to recruit interns from universities, It helps to open up an opportunity for fresh perspectives on the plans and strategies.
Down the road, Valfoo will continue to develop different product lines and expand its markets. Daniel says that many regions are grappling with an ageing population, whereas developing countries still have high birth rates. Elderly and young people have different nutritional needs, thus providing different markets for dairy products made from different formulas.
He observes that, as China is increasingly concerned with food safety, Chinese people are more demanding about the quality of food ingredients. This has also delivered an opportunity for Valfoo to grow faster in the market.
At the same time, the company is planning to break into South Korea and Japan in the near future, as both countries maintain high awareness of food safety.