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Ornua 'confident' of success as rival eyes key market

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John Jordan has admitted he was disappointed by US tariffs. Photo: Finbarr O Rourke

John Jordan has admitted he was disappointed by US tariffs. Photo: Finbarr O Rourke

John Jordan has admitted he was disappointed by US tariffs. Photo: Finbarr O Rourke

Dairy giant Ornua has said it is "very confident" in its Kerrygold brand as it faces increased competition in Germany from Irish rival Kerry Group.

Kerrygold is the number one butter brand in Germany.

Last July Kerry Group, headed by chief executive Edmond Scanlon, launched its Dairygold butter in Germany, in competition with, among others, Ornua's Kerrygold.

However, Ornua says it is ready to take on competition.

"We are used to facing competition, the success of Kerrygold has put us in an incredibly strong position," John Jordan, chief executive of Ornua told the Irish Independent.

"When other companies try follow us in it is a compliment to the work we have done, but ultimately it's about consumers and they love what Kerrygold stands for.

"So we are very confident in our brand, our quality that we can take on any competition and win."

In 2019 sales of Kerrygold exceeded €1bn globally as it grew its market share in key strategic areas of Germany and the United States.

Last October, the US imposed 25pc tariffs on a long list of goods including butter.

Donald Trump's administration made the decision amid rising US and European trade tensions.

In response to the tariff, Ornua - which employs 2,400 in 13 factories around the world - put through the additional cost as a price increase on its butter.

But it says that while it was "very disappointed" by the decision to impose tariffs, to date it has not experienced any fall in demand for Kerrygold in the US.

"We were OK for November and December because it is Thanksgiving and Christmas, peak season for butter," said Mr Jordan.

"We were worried coming into 2020 that the new increased price would impact demand, but ironically in the Covid-19 environment, retail sales have seen the same spike in the US market."

Another company affected by the US decision to impose tariffs is drinks giant Diageo.

The company, employing 1,200 across the island of Ireland, would not comment on whether sales of Baileys had been impacted by the tariff.

Meanwhile, Ornua said it is key that the dairy industry looks for Government and EU support for farmers on the back of the coronavirus crisis.

Ornua estimates demand for dairy products globally will fall by between 10pc and 12pc but says it will continue to pay milk suppliers in line with 2020 agreements.

"It's important to recognise in terms of EU spending on budgets, their priority is health, but certainly funding and supports to help an industry that will be under pressure should be looked at over the next number of months," Mr Jordan said.

He added that the Department of Agriculture here is very close to the dairy sector.

"They understand the pressures the industry and farmers are under," Mr Jordan said.

Irish Independent