Delivering value

Ornua, owner of the Kerrygold brand operates in 110 countries and had sales of €3.4bn in 2024. Counterintuitively, while Ornua’s turnover last year had not increased on the previous 12-month period, profits did increase, with the ‘earnings before interest, taxes, depreciation, and amortization’ (EBIDTA) figure up by 10.5 per cent to €165.5m, and the operating profit figure increasing by 12 per cent to €130.5m. Significantly, debt load reduced by 44 per cent to €86m.

Market spread

Market penetration for Kerrygold butter continues to increase across Ornua’s main markets. Holding its position as the premier branded butter in Germany, it’s now the second placed block butter product in the UK and the fastest growing brand in the category. Ornua’s marketing and product development dynamism can be seen from the launch of 12 new products in the past year, including a new cream cheese under the Kerrygold label. Alongside Kerrygold butter, Ornua owns the Pilgrims Choice cheese brand in the UK, holding second place in the branded cheddar market there. Kerrygold’s phenomenal success in the US continues to impress. It holds the dual status of being the number two branded butter in the States as well as the biggest imported butter. In highlighting the ingredients side of Ornua’s business, Conor confirmed the handling of 350,000 tonnes of Irish product in 2024.

Massive growth potential

Despite Ornua’s success, as outlined above, Conor was asked to identify the growth opportunities for Irish dairy: “There’s still a massive growth opportunity in bringing the story of Irish dairy to new markets, along with expanding in our existing markets,” he said. “There’s more potential in the US and we’ve made a lot of progress in the last 12 months in the UK. That will continue, as we look to launch new products that are relevant to consumers, while continuing our diversification strategy.
“We are going through a mid-term review of our five-year strategy. Factors we're looking at include, what the new markets will look like, making sure that our products are relevant to consumers, and establishing that these customers are willing to pay a premium for high-value, nutritious Irish dairy.”

Supply constraints

With Kerrygold butter sales continuing to increase, is the Ornua CEO concerned about being able to supply that increasing demand, given milk production constraints and a plateauing of output on Irish farms? “It’s certainly something we have to protect and I recognise our members’ initiatives around the environment, whether it’s water quality or emissions or biodiversity, because we want to hold onto what we have. It’s important that we continue to drive value back into that milk pool, and that’s what Kerrygold does. The more of our milk pool that we can allocate to higher margin products the more value we can drive back to the producer.

“In terms of concerns around supply, we recognise the ongoing discussion in relation to Nitrates Derogation, and our co-ops and dairy farmers are very focused on actions to improve water quality, so we have a very strong case to retain our derogation and maintain milk output.”
In the event of further rationalisation in the Irish dairy-processing sector, Conor says he is confident that Ornua’s relevance can be maintained: “We have to remain relevant to our members and to dairy farmers and be able to demonstrate the value that we’re generating. Ornua’s payment policy and the value that drives back into the industry, the products we purchase, and the price we purchase at, are very important to demonstrate the value that Ornua delivers. We have a recognised ability to exploit higher value markets. We must first of all recognise and respect that our member co-ops have businesses to run and they run them very well. But equally, the role that we play in the industry is clear. If we continue to drive value through the Kerrygold brand and our strong customer relationships on the ingredient side, then that relevance remains.”

Future prospects

The Ornua head considered the continuing evolution of Irish dairy in the global marketplace: “The world is changing, with significant population growth forecast for a number of regions. We’re already well-placed in West Africa with a strong market presence in Nigeria setting us up for further growth. Our North Africa business, particularly in cheese, is another notable market with further growth potential.
“Other developing countries are a key focus for us, including South America, and we have initiatives underway to ensure that where populations are growing and can afford to pay for Irish dairy, we’re there.”
With very positive consumer feedback on its new cream cheese, Conor said: “Consumers tell us they want a higher quality product than is available currently and Kerrygold Cream Cheese delivers a different experience, as a pure, cultured, natural product made with Irish milk. That comes through in the taste, texture, and quality. We believe it has enormous potential in several strategic markets. We’ve launched in Ireland and will do so shortly in the UK. In other countries, including the US, natural dairy products have a relevance to customers. We see that with Kerrygold butter and, moving at the right pace, we can build on that. We’re very clear that the brand stands for Irish grass-fed milk and, provided that’s at the core of whatever we launch, then it’s part of the essence of Kerrygold.”

Positive outlook

Conor reflected on the global dairy market outlook: “As of now, markets are stable. Demand/supply ratio in the first quarter was reasonably balanced. Inventories were low coming into 2025 and several dairy-producing countries are behind where they were last year. Overall supply is about half a per cent up but is more than covered by demand, especially for high quality product. Unless we see a significant global shock with what’s currently happening around tariff threats, that stability should be maintained for most of 2025. The challenge comes with any change in dairy flows. If tariffs disrupt trade between large producing and importing regions, like US dairy exports to China, for instance, product gets diverted. Trade flow disruption can have an impact on price. Uncertainty creates price changes quite quickly. But right now, all things being equal, we anticipate a reasonably stable year on markets.”

Driving value

The Ornua CEO outlined future investment strategy: “The outcomes of our mid-term strategy review will inform our investment plans. We have a balance sheet which will allow us to continue investing carefully behind initiatives that will drive value for Irish milk producers.”

The Mercosur question

How does he view a potential Mercosur trade agreement? “There are worries around a potential impact on beef prices. For dairy, it could open up new markets. We need to be cautious until we see the detail around implementation. Dairy is a relatively low-margin business, and trade barriers or tariffs generally take value out of the supply chain. We would always welcome access to new markets under trade agreements that allow us to sell product efficiently.”