Faraway hills greener for dairy board?

Kerrygold butter seems to be going from strength to strength

As chief executive Kevin Lane was keen to point out, the international success of Kerrygold and other milk products bodes well for the end of quotas next year

As chief executive Kevin Lane was keen to point out, the international success of Kerrygold and other milk products bodes well for the end of quotas next year

Thu, Apr 17, 2014, 01:00

Kerrygold butter, the bellwether of the Irish dairy industry, seems to be going from strength to strength. According to the Irish Dairy Board, which manufactures and sells butter and other milk products on behalf of the dairy co-operatives, it is the biggest selling butter in Germany by any measure. It is also the leading imported butter in the US.

As chief executive Kevin Lane was keen to point out, the international success of Kerrygold and other milk products bodes well for the end of quotas next year and the first opportunity for “meaningful expansion” of the dairy sector in 30 years.

IDB seems well prepared and funded. Its business transformation strategy, outlined in 2010, has been implemented. The organisation has €52 million in the bank, and debt facilities of €420 million, indicating that sizeable acquisitions and investments are contemplated as part of an ambitious plan. One thing missing in yesterday’s upbeat presentation was
any indication of how the Kerrygold
brand was performing in the domestic market. The IDB is all about exports
but it still promotes Kerrygold heavily in Ireland, and it would be interesting to know how sales are holding up given the premium charged over own-brand
and even some branded butters. Interestingly Aurivo reported a 15 per cent increase in butter sales.

The suspicion is that consumers in the domestic market have come to much
the same realisation about Irish butter that they have reached about Irish milk: there is no real difference between branded and own-branded products
other than the price.

Focusing too much on the premium- branded market may yet be the Achilles heel of the IDB’s big plans post 2015.

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