Farm Ireland

Tuesday 24 October 2017

Golden age when irish buttered up the world

Dr Tony O'Reilly recalls the launch of Kerrygold

Declan O’Brien

In 1961 Ireland embarked on a journey which was to profoundly change the farming sector and revolutionise the dairy industry.

A traditional dairy commodity producer, Ireland was now putting structures in place to sell its output in an ordered fashion and become a serious player on Europe's export markets.

A year later the Kerrygold brand was launched and what followed was a tale that was in tune with the Swinging '60s. Beautiful young ladies in short skirts and tight tops helped portray a new image of the Irish dairy sector.

Markets were carved out in Britain, Germany, Eastern Europe and the Middle East, as Irish butter sales soared.

Kerrygold was making it in the most surprising of places, from Lebanon to London. Indeed, there was one enterprising Cypriot distributor who reportedly used Red Crescent ambulances to ship butter to the Turkish sector of the divided island.

But behind all this, there was real business being done. Between 1957 and 1967 the value of dairy exports more than trebled, while in the 11 years between 1959 and 1970 total creamery milk production went from 246m gallons to 510m gallons.

Driving this new policy was the recently established Bord Bainne, the precursor of today's Irish Dairy Board (IDB), and its chief executive, Tony O'Reilly.

Bord Bainne had been set up following the adoption of the Dairy Produce Marketing Act in January 1961, which came about as a result of proposals to significantly increase cattle numbers.

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These proposals were included in the first Programme for Economic Expansion which was published in 1957 by the newly appointed secretary general of the Department of Finance, TK Whitaker. The programme not only set out a roadmap for industrial expansion, but identified agriculture as a key driver of economic growth.

However, an increase in beef numbers meant there was a "biological imperative" to improve the marketing of dairy products, Dr O'Reilly explains.


As beef production in the 1950s was driven mainly off surplus stock from the dairy herd, any sizeable lift in beef numbers meant a corresponding increase in the dairy herd.

However, the demand price elasticity of the Irish butter market was extremely low.

With no market in Ireland for additional dairy produce, it was clear any extra stocks would have to be exported at a discounted price.

It was against this background that the Dairy Produce Marketing Act was drawn up and its passage through the Dáil provoked some lively exchanges and epic debates involving the then Minister for Agriculture, Paddy Smith from Cavan, James Dillon, Paddy Donegan and Padraig Faulkner.

A year on from its foundation, Bord Bainne was still without a chief executive. It had a functioning board but it was the spring of 1962 before they appointed what was then termed the 'chief officer'.

Early in 1962 Dr O'Reilly was proposed for the job. He was working as PA to the chairman with Suttons of Cork at the time, while also doing some part-time lecturing in work study and work measurement in UCC with his friend Paddy Hayes of Fords in Cork. The post with Suttons meant he had dealings with creamery managers across the country, selling them everything from coal and oil to barbed wire and grass seed. "I approached the position with a sense of interest and curiosity. I was fascinated by the concept of the job but I had essentially an urban background," he says.

However, the board obviously felt he could do the job and he was appointed after his first interview.

"I started on first of April 1962 and announced to the board in July the plan to launch a new consumer pack for butter on the British market," Dr O'Reilly recalls.

The aim was to get beyond the commodity market in Britain which was dominated by butter wholesalers and blenders who traditionally bought Irish butter at a knock-down price. This was an important decision. The strategy was prepared with the help of the Economist Intelligence Unit, the advertising agency Benton and Bowles and the encouragement of Fred Adams of English distributors Adams of Leek.

The goal was to get to the retailers and sell straight to the consumer. In order to do this, the new chief officer had first to educate his board on the difference between marketing and selling.

"Marketing was a concept not known even to our board. Ireland was selling surpluses on a staccato basis. A dry summer and the creameries were out of stock and out of the market," Dr O'Reilly says.

The challenge facing Bord Bainne was to guarantee a quality, premium product 365 days of the year. The American economist Theodore Levitt once likened marketing to politics and sex -- "it is a squishy subject" -- and Ireland's dairy chiefs were now set for a crash course on the subject.

The board of Bord Bainne was headed by the legendary Paddy Power, chairman of Ballyclough Creamery in Mallow, Co Cork.

It also included John Feeley and Frank Wall from the ICMSA, Larry Brady of the NFA, Martin J Mullally of the Dublin and Cork District Milk Boards, Capt David John Barry of the Irish Cream Exporters, Dr Tony Hennerty, Jim Lynch of Mitchelstown Creamery, representing the cheese manufacturers, and Dick Godsil of Rathmore Creamery who was the chocolate crumb exporters delegate.

Help was also provided by the Department of Agriculture, with the then secretary general Jack Nagle, the assistant secretary Tom McCartney and the principal officer Dick McKenna being very supportive of the initiative, Dr O'Reilly says.


The board was initially slightly sceptical about abandoning the traditional 28lb boxes of butter and adopting flashy consumer packs, but they were willing to be won over.

The first item on the agenda was the name of the product.

A shortlist of three was drawn up by the advertising agency -- Buttercup, Shannongold and Kerrygold.

"I recommended Kerrygold. I explained to the board that it was a very strong name; it had a strong K, it was very well recognised and had an obvious Irish background," Dr O'Reilly recalls.

However, the decision did not meet with the approval of Martin J Mullally, who pointed out to the board that there were "no cows in Kerry at all" -- an assertion Denis Brosnan and Kerry Group have roundly disproved since then.

With the name agreed, a marketing strategy was drawn up for the lucrative British market, which at that time absorbed virtually all the world's butter exports -- some 410,000 metric tonnes.

Ireland was allowed a quota of 12,000t into the UK in 1962, much lower than New Zealand, Denmark and Australia who could ship 158,000t, 93,000t and 63,000t respectively.

The board targeted half the Irish quota, or 6,000t. With this in mind Bord Bainne concentrated their efforts on the northwest of England, home of Granada Television, where there were large Irish emigrant communities in Liverpool and Manchester, and where transportation costs could be kept to a minimum.

A premium of £12 10s over the New Zealand price of £310/t and a 10pc share of the regional market were the targets. Kerrygold was launched on October 1, 1962 and the goals were quickly achieved. At this stage the board had been won over to the merits of marketing and £75,000 was allocated to build brand profile. This was a huge marketing budget for the time and was testament to the ambition of the campaign.

The marketing slogan chosen was 'Discover The Secret of Kerrygold, it's Pure Village Churned' and Dr O'Reilly recalls one particular presentation to the board where Terry Wogan's future wife Helen and the Rose of Tralee winner Josie Ruane were in short green skirts and tight white blouses acting as milk maids.

"You could feel the temperature in the room rising, and after it was over Paddy Power turned to me and said: 'If that's marketing, I'm all for it.'"

On the ground in England, packing and distribution deals with companies such as Lovell and Christmas, CWS, Adams of Leek (now owned by the IDB) and HA Lane helped secure market penetration right across Britain.

The board also identified the growing importance of the supermarket chains. Sainsbury's, Tesco and Asda, as well as others that have since disappeared such as Home and Colonial, controlled around 50pc of the grocery retail market in the early 1960s but it was obvious that that share was only going in one direction.


Over the next four years the Bord Bainne management team of Dr O'Reilly, Joe McGough, Jim Kenny, the UK marketing manager Carton Finnegan and the chief financial officer Brian Doyle built the Kerrygold brand and grew sales and exports in the process.

In 1962 Bord Bainne sold 8,300t in Britain, this had grown to 13,400t by 1966 and to 24,400t by 1970.

Other markets were also opened up. In later years, East Germany and, particularly, West Germany became significant importers of Kerrygold. But Russia, Czechoslovakia, Lebanon and Cyprus were also buying Irish butter.

The period was also to herald significant changes at farm and processor level in the dairy sector. In 1966 there were close to 110,000 farmers nationally supplying 407m gallons to around 150 different co-ops.

The average supply was 2,370 gallons, just 16pc supplied more than 7,000 gallons and a mere 2.4pc supplied more than 15,000 gallons. However, though the expansion of the industry was to see a drastic reduction in dairy farmer numbers, it also brought a sustained lift in output and margins.

In 1966 Dr O'Reilly left Bord Bainne and joined the Irish Sugar Company but he retained an interest in the sector.

"My interest caused me to do a PHD on the marketing of agricultural produce which kept in touch with developments in the sector".

He was succeeded by his friend, and deputy, Joe McGough, who continued to develop the business.

Looking back at what was accomplished by the early management at Bord Bainne, and by the achievements of those that followed in what was to become known as the Irish Dairy Board, it is clear that they ploughed a furrow which others such as Kerry Group and Glanbia were later to follow.

"There have been only six CEOs of the Irish Dairy Board; Joe McGough, Brian Joyce, Noel Cawley, Noel Coakley, Kevin Lane and myself in the 50-year history of the board," Dr O'Reilly says.

"That level of continuity is unusual in today's business environment," he observes.

The success of Kerrygold broke new ground for the food processing sector and proved that Ireland could compete with the best if the product was right.

With Kerrygold, Ireland showed what could be done with the right concept and a quality product securing a premium price.

The success helped dispel a patronising and condescending attitude to Ireland which held that we had a lovely country with beautiful scenery but not much else.

Kerrygold became a symbol for a lot of things. It's doubtful that any other Irish product, with the exception of Guinness, is better known internationally.

Although long gone from the dairy sector, Dr O'Reilly still has very fond memories of those times.

"It was the most enjoyable job I ever had, a real voyage of discovery with a wonderful group of people."

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