Ornua grabs a pizza the action with fresh focus on mozzarella
Co-op insists Irish farmers will benefit as it ramps up production at Spanish site - and avoids over-reliance on fickle cheddar market in 'hedge' against no-deal Brexit
Fears of a cheddar mountain in the event of a no-deal Brexit have forced the Irish dairy industry to consider diversification, but Ornua's move to intensify its production of mozzarella was in the making long before whispers of Brexit ever began.
In 2014 Ornua acquired a Spanish cheese and cheese blends plant in Avila, an hour north-west of Madrid.
In 2017 the facility was destroyed in a fire, with production capacity immediately transferred to Ornua Ingredients (OIE) sites in the UK.
With Brexit uncertainty increasing in 2017 and 80,000 tonnes of cheddar exported to the UK on an annual basis, Ornua Ingredients took the decision to re-invest in the Avila site and build a factory which can produce 35,000 tonnes of mozzarella and serve its growing EU market base.
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"Having a footprint facility like this on continental Europe gives us access to the market and a hedge," Ornua CEO John Jordan told the Farming Independent at the recent reopening of the Avila site. "Who knows what is going to happen in a Brexit context?"
While there's no danger of a 'mozzarella mountain' occurring, Ornua's new facility at Avila has the potential to expand production to 70,000 tonnes to serve its various food service and manufacturing customers, which include global pizza and fast-food brands.
Earlier this year Ornua stated that it had stockpiled nearly 40,000 tonnes of mainly cheddar cheese in the UK, which would allow it to supply UK customers in the event of a hard Brexit.
However, Mr Jordan said Ornua increasing its mozzarella production is a "good news story" as it provides an alternative route to market for Irish farmers' cheese, particularly in light of Brexit.
"Cheddar is a huge product in terms of output for Ireland - the biggest market we have for that is the UK, which is under threat or some challenge with Brexit," he said.
"We're three and a half years in to it, we have to look at product and market diversification."
Mr Jordan explained that Ornua uses cagliata or cheese curd, which is produced from milk processed in Irish co-ops and is then transported to the factory in Avila and used to produce mozzarella and pizza cheese.
"Mozzarella and pizza cheese have growth opportunities whether it's in home or out home or all those other food types that need processed cheese," he said.
While the CEO recognises that there is "massive growth" in the sector for Ornua, he says it won't replace the importance of cheddar to the business in the long term.
"Will the sector absorb cheddar in the short term? No. But will it release some of that pressure? Yes" he said.
Ornua Ingredients Europe managing director Bernard Condon added that mozzarella would provide a more straightforward route to market for its cheese in Europe, as cheddar isn't 'the norm' outside Britain and Ireland.
"With the potential impact of Brexit on our key cheddar market we do have to think of markets for our other cheese solids," he said.
"Mozzarella is a product that is consumed globally and across continental Europe. When you come outside the UK and try to sell cheddar it is pretty much a niche product."
Alastair Jackson, director of sales and marketing at Ornua Ingredients Europe, also feels that the decision to re-invest in the Spanish site came at an opportune time with Brexit.
"From a Brexit perspective we've got two options: we've got the UK sites which can service the UK and exporting, but we have the Spanish business if anything did come in with tariffs.
"If we didn't have the Spanish facility exporting to the UK from Europe, a no deal situation would have been a challenge.
"We see Brexit as an opportunity for this side of the business."
The mozzarella facility in Spain is one of numerous branches of the €300m Ornua Ingredients Europe business.
While farmers and consumers immediately think of golden slabs of Kerrygold butter when Ornua is mentioned, the workings and products of the ingredients side are lesser known.
Mozzarella and other cheeses are produced in Avila and Ledbury in the UK. Ornua's site in Nantwich in the UK focuses on cheese grating and dicing, while sports nutrition and powdered blending is another major element of the business.
Despite half of Irish farmers' product being used to create this produce, building awareness of this is something Ornua is keen to progress.
"Ornua is unique as a co-operative as we are not farmer-owned, we are a co-op of co-ops. We are a step away from the farmers and that can create a lack of understanding of who we are," said Mr Jordan.
"It is a challenge for us, letting our shareholders who are the co-ops be clear on what we are doing and balancing that with business. Real value is about selling the product."
Spanish staff hailed for response to devastating' fire
Ornua Avila will be the driving force behind the production of 100 million pizzas across Europe - and it wouldn't be possible without the "amazing" response of local staff to the fire that destroyed the original plant two years ago.
Local staff who make up a team of 120 at the plant, which is the town's largest employer, told of how they thought their livelihoods were lost forever following the 'devastating' 2017 fire - the plant had only been purchased by Ornua three years previously.
A handful of local staff relocated to the UK to continue working for Ornua in Ledbury.
While deciding to rebuild the Avila site made best business sense, Ornua Ingredients Europe director of marketing Alastair Jackson says the commitment of its staff was also a driving force behind the reinvestment.
"The place got built in the time it did because of the amazing people. It's been a huge team effort," he said. "All the staff have been retained and those that didn't come to the UK were paid in the meantime."
As well as manufacturing, the Avila site features a R&D Centre of Excellence with a pilot plant and innovation kitchen dedicated to developing the next generation of pizza cheese and cheese ingredients for the $130 billion global pizza market.
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