Tirlán’s China strategy
Based in Shanghai, Raymond provided an insight into the potential of the Chinese market for Irish dairy produce: “To begin with, there is a huge population in China and millions of Chinese are becoming increasingly diverse in their diets, which includes more milk-based products.
"This means there are enormous opportunities to grow our market share. There are 1.4 billion people in China with more and more people consuming milk and dairy products every day,” he said.
Even allowing for the Chinese Government’s implementation of a strategy to become self-sufficient in dairy and less reliant on imports - by supporting the development of mega-scale dairy-production and processing facilities across the country - there will be a continuing and increasing opportunity for Irish dairy processors to target the Chinese consumer with high-end, added-value dairy products. The proportion of Tirlán’s total dairy sales of 430,000 tonnes devoted to Chinese exports is still relatively small, but the co-op is clearly intent on growing that market in the coming years.
Ten years of growth
Raymond confirmed Tirlán’s ambitions in that regard: “We have a lot of strategies in place to grow volume and value to our sales. We started the business exporting to China from scratch 10 years ago. Within those 10 years, we have been constantly promoting our products. Brand awareness is growing, and part of the marketing strategy is the use of cooking demonstrations in restaurants, bakeries, and food outlets across China on a regular basis to show the uses and versatility of Tirlán’s dairy products. The result of constantly promoting and building consumer awareness is that, over the 10 years we have been in the Chinese market, we have achieved a third-place position in sales volumes behind New Zealand’s Anchor brand and Elle & Vire, the French brand.”
High-end market target
The scale of opportunity for dairy exports to China can be best understood when one realises that the vast country accounts for 60 per cent of global dairy demand. While the birth rate has reduced in recent years, curtailing the demand for infant formula somewhat, the Chinese population is ageing, and by 2040 it is expected that there will be about 400 million people over the age of 60. This presents a huge opportunity for supplying calcium-rich dairy products in the years ahead.
In addition, the Chinese economy has transformed in the past three decades so that hundreds of millions of Chinese families are now regarded as middle-class with aspirations and the financial ability to adopt more ‘western’- influenced lifestyles, including a dairy-rich diet. Tirlán’s marketing strategy is to target the higher end of consumer preferences, Raymond explained: “It’s the relatively higher end of the market that we’re targeting, compared with some domestic players. Our quality standards allow us to set a selling price of about 40 per cent above the average pricing.”
But there are challenges in the Chinese market currently, Raymond explained: “A situation we are seeing in the past few months is that there is too much milk in the market right now. Some domestic players have already converted their milk supply into milk powder to give a longer storage life, but the milk powder stock levels are very high as a consequence. What we are seeing among some smaller domestic dairy producers, is that they are starting to slaughter the cows on their farms. With this kind of situation, we believe in the next 18-24 months the market imbalance situation will be corrected. The development of very large-scale milk-production units of several thousand cows each is a big factor in Chinese milk-production trends.”
Tirlán chair, John Murphy with Raymond Li, Asia Pacific business development director, pictured at an open day at Tirlán's Ballyragget production facility in Co. Kilkenny. Photo: Dylan Vaughan.
Novel marketing approach
One novel strategy to raise brand and quality awareness of Tirlán’s milk products is by means of a camera system where would-be purchasers can view the cream being processed at Ballyragget. Raymond explained: “With this technology development, we can demonstrate that we have very good processing facilities and quality-control laboratories in the factory at Ballyragget. We use this visual link so that customers are looking at our milk being processed at the same time as its practical uses are being highlighted in a demonstration kitchen in China. In turn, this really helps our research and development team to know what the real demands and requirements are on the Chinese side.”
The proof is in the cooking
Providing further detail on the value of Tirlán’s demonstration kitchens in marketing its produce, Raymond said: “We can bring in chefs to show what is possible in terms of high-end bakery, for instance, using Tirlán dairy products. We have a 15-person team based in Shanghai including two chefs. One is a pastry chef and the other is a tea beverages chef. We invite our customers to our kitchens and our chefs do demonstrations using Tirlán dairy products. We have two purposes. The first is to demonstrate how good our cream is and to tell the grass-fed story to the customers. The second reason is that we are also spreading greater awareness of our high-quality brands.”
On a mission
In April 2023, Minister of State with responsibility for New Market Development, Martin Heydon, led a trade mission to China – Hainan and Shanghai – to promote Irish food and drink across a range of sectors including dairy, beef, pork, seafood and spirit drinks. This was the first in-person agri-food trade visit to China since 2019. A month later, Minister for Agriculture Food and the Marine, Charlie McConologue, led another one. For more information on these, and the work that is being done to obtain greater market access for Irish food and drink, turn to Rural Life on pages 84-85.
Long-life dairy
A major proportion of liquid milk consumption in China is based on long-life products, Raymond said: “Actually, 70 per cent of Chinese milk consumption is from the ultra-heat treated (UHT) side. We are a significant supplier of UHT milk product to the Chinese market. We started this UHT milk business 10 years ago and Chinese customers still prefer the imported UHT cream rather than the domestic product. Tirlán supplies a range of products to Chinese customers including UHT cream, UHT milk, as well as cheddar and butter.”
When Raymond joined Tirlán 10 years ago, there was low consumer or dairy-buyer awareness of either Ireland or Irish dairy produce. Much has changed in the meantime, he said: “With ongoing product promotion over those 10 years of supplying the Chinese market, consumer and customer awareness of Ireland and our milk-production model has grown significantly. I would say a lot of people think grass-fed is a truly positive selling point and more and more people believe Irish milk produced from grass has a better functionality than the milk produced in China.”