Ireland’s Gold Star

Last year marked a milestone for the Kerrygold brand, which celebrated six decades in production. The year also saw Ornua’s turnover reach a record €3.4bn. Nonetheless, the group’s CEO, John Jordan stressed that 2022 was a challenging year for Ireland’s largest dairy exporter: “It was a very challenging year for industry across the supply chain, driven by spikes in commodity prices, particularly at farm level. Input costs in fertiliser and fuel all went up, however milk prices were at a record high. In Ornua we saw an increase in the prices we paid, but we also went out the market for price increases so we made sure we balanced that out as part of our strategic approach. We responded to these shifting market dynamics by remaining focused on our strategy and committed in our efforts to deliver for customers, consumers and our member co-operatives. This is reflected in the exceptional sales performance, underpinned by the hard work and commitment of our 3,000-strong global team.”

Currently exporting to over 110 countries, John notes that he is optimistic for growth, with the organisation’s new five-year strategy at the heart of this ambition: “We are very optimistic for the future of our brands and our business, supported by a newly-remodelled five-year strategy, focused on addressing emerging challenges and opportunities to drive sustainable growth in key markets, ensuring we continue to deliver value for our member co-operatives and the 14,000 Irish dairy farming families we represent.
"The Kerrygold brand sells over 11 million packets of butter and cheese each week and in 2022 it reached a significant milestone, celebrating six decades since the brand’s launch in 1962, by achieving continued volume growth globally. The brand’s success is testament to the generations of Irish dairy farming families who produce the best quality milk, our member co-operatives, who operate well-invested, world-class manufacturing facilities, and the teams, spanning 60 years, who proudly bring the taste of Kerrygold to the world.”

Milk price

Commenting on milk price, John says: “In terms of milk price, we have seen a very significant fall in milk price at the end of 2022 and markets have continued to weaken this year across the EU. I think there is room for this to fall further. To be fair to the co-ops in Ireland, they are paying the best prices out there, but these are not sustainable in the long-term. It has been very challenging for farmers: last year there were farmers in financial and mental strain regarding the prices they were locked into – some farmers have gone very aggressive into it and locked in large volumes. That is less of an issue now and the pressure has come off farmers somewhat.”

Sustainable strides

Commenting on meeting climate action targets and the possibility of a voluntary dairy reduction scheme, John says: “Sustainability is key. The Government brought in legislation regarding our targets as a sector and we are all bound to have a willingness to achieve these goals. The Government has managed it well; they have put in working group which is looking at what proactive measures can be taken to help reach those targets and the financial implications associated with this. Among the broad range of proposals is a voluntary reduction scheme. Overall, I am very positive from an Irish perspective; we are some of the most carbon-efficient producers of dairy and dairy farmers in Ireland are keen to meet targets – our industry is willing, supported by the latest research, grant aids and tax breaks and also alternative income streams such as biomethane.” 

John does note, however, that this positive message is not necessarily what the general consumer hears and agrees that there is a disconnect between Ireland’s farming community and the general public. “I am fully convinced that farmers are the heroes of this story, not the villains. When you look at milk alternatives, such as almond milk – it can take 10,000 litres of water to produce 1 litre of almond milk and there is minimal nutritional value compared to dairy. I don’t think the consumer has thought through the full implications here. Irish dairy is in a really good place in terms of being carbon efficient and farmers are being unfairly vilified.” 

He believes the industry needs to focus its attention on better communications regarding this messaging: “As a sector, we have to do a better job in communicating this message. We don’t do it well. There is a lot of fragmentation around who owns the story, who is telling it. Hopefully, though, what will happen over time is that people will see the measures that have been – and continue to be – put in place to produce positive environmental outcomes – around water quality or biodiversity, for example. But the industry should be doing a better job to highlight the good work being done on farms.”

Expanding production

In the same week that the financial results for 2022 were released, the first butter was produced on site at the newly expanded Kerrygold Park. The expansion will see the production volume double at the facility, responding to growing demand in global markets. “In 2015 Kerrygold Park opened, the Ornua-owned butter facility, which had a capacity for 40,000 tonnes of consumer packed product. In 2021 we went for planning to double that footprint. We have just started producing butter on the site and this will allow us to underpin growth for the next five to 10 years. I say five to 10 because we might underestimate it again and need to expand production again in five years! We are currently the number-one brand in Germany and the number-two in the US. Kerrygold Park is also a hub for innovation: Innovation is important for the brand and we have developed new pack formats, flavours and spreads here.”

Future growth

In 2022, the Ornua Board of Directors approved a new five-year strategic plan for the business, Path to Prosper, which will now guide Ornua to 2027. John explains the direction for the year ahead, based on this strategy: “The strategy is about focusing where we can deploy our resources to gain the maximum benefits. Germany and the US are pillars for growth for Ornua still – our ambition is to double our sales in the US. In ingredients, we are strong with blue-chip customers and in the pizza chain world also. We want to grow our partnerships here. We are proud of the fact that we have very loyal customers and some of our distributors have been with Ornua for 50 years. We don’t see Asia as a market for expansion as we don’t have the product portfolio to suit this customer - for future growth we are focused on Africa.”