Keeper Of The Kingdom
DENIS Brosnan last week gave the strongest sign yet that the days of Kerry Co-op's control over the Kerry Group are numbered, and the co-op's stake in the plc will fall below 50 per cent "sooner rather than later".
This might seem like the first stage of a revolution in the Irish food industry with co-op's surrendering long-cherished control over their own destinies. But anybody who knows Denis Brosnan is quite certain that he will ensure that the 5,000 farmers who own the co-op will retain a large degree of control over their billion-pound turnover public company.
Denis Brosnan does not hide his Kerry identity - rather he flaunts it at every opportunity, and occasionally uses his company and his own high profile to promote the county's interests. "I take great pride in having put Kerry on the map for all Kerry people," he told Ivor Kenny in an interview in Kenny's book in Good Company.
That commitment towards the Kingdom is manifested in many ways - both through Kerry Co-op, Kerry Group and personally. Mr Brosnan was largely responsible for getting Kerry Airport at Farranfore off the ground, while Kerry Group bought Kerry Spring Water off a liquidator when it fitted nowhere into Kerry's grand plan. He was also the driving force behind Swing, a golf club co-op aimed at promoting tourism at the group of west of Ireland clubs - including four clubs in his home county.
Kerry may have expanded at a rate of knots since he took the company public 10 years ago, but Mr Brosnan and his management team are acutely aware of their home audience as they are of the stockbrokers and institutions who have invested in the group.
Journalists from local newspapers and radio stations are given as much priority as the financial press - Mr Brosnan and his deputies, Hugh Friel and Denis Cregan know well that just over half of the public company is owned by a co-op which in turn is owned by 5 000 local farmers and suppliers
"Denis knows well that Kerry will need to have access to the stock market if the group is going to continue to grow, but he's also going to want to make sure that the co-op holds enough shares to keep control in Tralee," says an industry source.
Mr Brosnan has never stated exactly what stake Kerry Co-op would keep in the group if the decision is taken to take the stake below 50 per cent. But he has hinted that he would like to see at least 30 per cent of the plc shares held locally - probably through the co-op. Given the wealth that he has generated for Kerry shareholders in the past 10 years, few doubt that they will continue to place their trust in Brosnan's judgment and that a large block of locally-held shares will remain intact.
The son of a farmer Denis Brosnan went to school at St Brendan's in Killarney, a local Gaelic football bastion. From there, he went to University College Cork where he graduated with a Master's degree in food science. His first job was as a detergents salesman before he joined Golden Vale as a production manager.
Mr Brosnan returned to Kerry in 1972 as general manager of North Kerry Milk Products at Listowel. Two years later Kerry Co-op was formed, partly in response to the evident need within the dairy industry for rationalisation. He was the driving force behind this merger, travelling from meeting to meeting of farmers pressing the need to rationalism When the merger finally came, Kerry Co-op ranked sixth among Irish coops with a turnover of around £20 million.
At that time Mr Brosnan recruited a management team which is still there today. Management of the co-op was concentrated on Brosnan, Friel, Cregan and a small number of senior executives - most of whom have been with Kerry since the co-op was formed over 20 years ago.
In the co-op's early years, Mr Brosnan pursued an aggressive expansion policy. This was mainly because Kerry's geographical position on the south-west tip of Ireland meant that the co-op had little option but to look outside its home base. Within three years, Kerry Co-op's turnover had trebled to over £60 million.
As turnover grew, Kerry also diversified its dairying base to reduce its dependence on commodities and the vagaries of the EC Common Agricultural Policy. Research and development was given the job of finding value-added acquisitions, a policy that culminated in the late 1980s with Kerry's expansion into the international food ingredients industry.
Growth was steady until the mid-1980s when the co-op took something of a leap into the unknown when Kerry Group was floated on the stock market. Those shares were floated at 52p - 10 years later the shares are trading at 520p.
Within two years of its flotation, Kerry Foods took a giant step with the £90 million acquisition of Beatreme Foods, one of the most advanced manufacturers of high technology food ingredients in the US. Kerry described the acquisition at the time as being "of huge importance to the group".
That was a major understatement as Beatreme became the springboard for Kerry's rapid expansion in the ingredients industry, an expansion that culminated two years ago in the £250 million acquisition of DCA. Kerry now has annual sales of well over £1 billion.
But while Kerry's expansion into food ingredients was well-timed, some of the other diversifications were not so well-founded. The group's expansion into beef processing through the acquisition of plants in Midleton and Clones was something of a disaster. Within the past year, Kerry has sold off its beef businesses at a loss - one of the few blemishes on an otherwise clean record. Following the DCA acquisition, well lover half of Kerry's earnings come from food ingredients and the original dairy business accounts for no more than 12 per cent of those earnings. It is no wonder then that Brosnan dislikes being seen as an Irish dairy company, preferring to be compared to the likes of international ingredients groups such as IFF and McCormicks.
But Kerry Co-op is still the blue-chip sector of the Irish sector, consistently trading at a premium to the other Irish co-op/ plcs and one of the highest-regarded Stocks among Irish fund managers.
In his private life, Denis Brosnan has become an increasingly prominent figure he the Irish racing industry, both as an owner and as chairman of the Irish Horseracing Authority. He is also a passionate fan of Gaelic football and plays golf.