Buttering up the Germans

Kerrygold is spreading out like never before in Germany by adding new products and keeping its focus on quality

When Gisbert Kügler was offered the job of managing director of the Irish Dairy Board in Germany eight years ago, he didn’t hesitate for a moment.

A 30-year veteran of the international dairy business, he was well aware of Kerrygold and its enduring success in the demanding German market. The brand will be 40 years in Germany next year, with every year bringing further growth.

Under Kügler’s leadership Kerrygold has continued to thrive. Sales have risen from 28,000 tonnes in 2004 to over 40,000 tonnes today and while Angela Merkel might not be impressed by our bookkeeping, German consumers are still buying our butter.

For almost four decades the Irish Dairy Board in Germany has been hammering home an image of Ireland as a clean, green country where happy cows graze on juicy grass and produce creamy butter with a distinctive golden colour. It is a message the Germans have bought into.

Nearly 13 million German households buy Kerrygold and the product is market leader (with a share of 15 per cent) even though it is around 70 per cent more expensive than the cheapest available brand. This is quite an achievement in a market where a high proportion of consumers shop in discount food stores.

“It is true that we have influenced the German view of Ireland and have probably made quite a big contribution to Irish tourism in the process,” says Gisbert Kügler. “Even though many Germans have never been in Ireland, they have seen it on a Kerrygold advertisement and this has become their image of the country. Our research shows a 90 per cent awareness of the Kerrygold brand.

“Generally speaking Germans prefer to spend their money on cars and holidays and expect good quality food for low prices. However we have always been consistent with the price of Kerrygold. We do not discount, yet it is one of the products the Germans continue to buy because of its quality. We have not experienced any negative sentiment among German consumers because of the financial situation in Ireland. In fact, we have increased our sales despite a declining market overall.”

It is precisely this “declining market” that has focused Kügler’s attention very firmly on new product innovation in recent years. In conjunction with the Irish Dairy Board here, a team began looking at developing a number of new products specifically for the German market.

New products

The first of these, Kerrygold Extra (a spread made from butter and rapeseed oil) was launched in 2009. Earlier this year a second product, Bratcreme cooking liquid, was added. This is a 70 per cent rapeseed oil and 30 per cent butter mix with no artificial additives and its “natur pur” slogan is designed to draw in heath conscious consumers.

“We need to appeal to younger consumers and for them butter can be too ‘heavy’ so Kerrygold Extra, which has 20 per cent less fat, is more acceptable. It is also in a tub, which is modern and more convenient. These variations have provided us with up-to-date products that are in line with the trend to light and healthy living,” Kügler says.

Sliced cheese, for example, is a big breakfast business in Germany and in 2013 Kerrygold will launch two new (Irish-made) sliced cheese products. “It is undoubtedly a very competitive segment but consumers like to know where their food is coming from and you don’t always get that with German products,” he says.

“The pure image of Irish food products in Germany is already very strong and is something that should be cared for,” Kügler says. “In my opinion the possible threats to it are something like an animal health scare or the perception of Ireland as a not overly industrialised country changing. As regards making the most of it, perhaps promoting organic products more and putting more emphasis on the origin of products, sustainability, and on good animal welfare could help as consumers become more and more conscious of what they are eating.”

Growth potential

Bord Bia also sees this potential. Speaking recently to The Irish Times, its marketing manager in Germany, Liam MacHale, said Irish food producers may be able to trade as much on the island’s green image as their actual products but German consumers are prone to mass hysteria over food scares and run a mile from a product they believe to be tainted. Anyone who pays lip service to a green Irish image without taking it seriously could see their German market collapse overnight.

Despite the challenges, there is growing recognition among Irish food producers that the German market is the big prize in Europe.

Kügler says: “In my opinion the German market is very open to new Irish food products. The groundwork has already been done by Kerrygold over nearly 40 years and all Irish food companies can benefit from this. For Kerrygold itself perhaps there is room to extend our range beyond dairy products.”