Kerrygold owner reports record revenue while warning of double-digit food inflation

Dairy exporter Ornua has reported record revenues of €2.5 billion for last year, up nearly 7 per cent on the previous year, on the back of strong sales and increased market share for its flagship Kerrygold butter product.

However, chief executive John Jordan warned that consumers were facing into a period of “strong double-digit food inflation” as increased energy and input costs, aggravated by the Ukraine war, are brought to bear.

“One of the big things for us in the food sector to watch over the next six to nine months is the impact those higher prices have on consumer-buying behaviour,” he said. “Will they buy less product? Will they trade down to private label? Will they buy product at promotion? What does it mean for eating out? What does it mean for eating at home?”

The price of raw materials through the supply chains of dairy products are at record highs, particularly for butter, cheese and milk powders, he said. This reflected increased costs across a range of input from energy and feed to fertiliser and shipping.

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“There’s inflation through the entire food chain, and consumers have only seen some of that so far. There’s more of it to come,” Mr Jordan said.

He was speaking as Ornua, the State’s largest dairy exporter, beat its own records with numbers for last year. The group, which exports dairy products on behalf of a 33-strong group of co-ops, processors and food firms in Ireland, said it sold more than 11 million packets of butter and cheese each week in 2021, with volume growth up 12 per cent.

Kerrygold butter is now the fastest selling butter brand on supermarket shelves in Germany and is the number two butter brand in the US. The Kerrygold brand is primarily butter but it includes a growing portfolio of cheeses, including Pilgrim Cheese in the UK. It became Ireland’s first billion-euro food brand in 2018 and is on course to hit €2 billion in 2025. Formerly the Irish Dairy Board and now in its 60th year, the group said its operating profit rose by 1.3 per cent to €153.7 million.

“Ornua maintained a strong, stable and sustainable performance year-on-year, as we marked our 60th year in business,” Mr Jordan said. “Despite persistent challenges, we are pleased to report a 6.9 per cent increase in turnover and a 1.3 per cent increase in operating profit for 2021,” he said.

In its report Ornua also noted that approval was granted for the €40 million expansion of Kerrygold Park in Mitchelstown, Co Cork, which will increase Kerrygold’s capability to meet growing global demand.

Aside from inflation, Mr Jordan said the biggest challenge facing the dairy industry was climate change and sustainability, which he said had grown not just as a producer agenda but as a customer agenda.

With Irish agriculture facing statutory emissions cuts, Mr Jordan said he believed dairy could cut emissions and become more sustainable without the imposition of quotas. However, he noted growth in the dairy sector here would probably slow.