Farm Ireland
Independent.ie

Tuesday 24 April 2018

Irish Dairy Board: Producers not yet ready for Chinese market

IDB CEO Kevin Lane.
IDB CEO Kevin Lane.
Dairy cows stand in a farm operated by Synlait Milk Ltd. in the town of Rakaia, 60km from Christchurch, New Zealand, on Friday, Aug. 30, 2013. Synlait, a unit of Shanghai-based Bright Dairy & Food Co., will process more milk than forecast in 2013-14, the company announced on Aug. 30. Photographer: Brendon O'Hagan/Bloomberg

Declan O'Brien and Sarah McCabe

The head of the Irish Dairy Board (IDB) says producers here aren't yet ready to service the Chinese market, after reporting sales up 5.5pc at €1.2bn.

IDB chief executive Kevin Lane said China is a "significant medium-term opportunity" for Ireland.

The IDB had commenced a search in China for "possible acquisitions", he said.

But he admitted that existing Irish dairy produce would have a "zero chance of success" in the massive Chinese market. Speaking to the press at the announcement of the results yesterday, he said that "tailoring" produce to local tastes would be essential for Ireland to significantly expand dairy sale to the Asian giant.

"I just came back from there (China) 10 days ago and I will tell you what the Chinese consumer is looking for is not the dairy products that are manufactured in Ireland today," Mr Lane insisted.

He said there was a good opportunity for (milk) powders, "provided they are done to the right standard". Local tastes also provided opportunities for "dairy-based beverages" and "spreadable cheeses".

The abolition of milk quotas next year presents a big opportunity for expansion, he added. The group has announced plans to create 50 new jobs in Co Cork, as part of a €30m investment in a Mitchelstown production facility which should ramp up production capacity.

A surge in sales of Kerrygold helped the IDB to almost double its profits last year, the company's latest results show.

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The agricultural co-operative reported an 87pc hike in pre-tax profits for 2013 to €22.8m, on revenues up 5pc to €2.1bn. This enabled it to award an €11m bonus to members, an increase of 16pc on the year prior.

Global dairy prices pushed up sales. A drought in major milk producer New Zealand and a prolonged winter in Europe led to a reduction in milk outputs in the first half of the year even as emerging market demand climbed, pushing prices up rapidly.

FLAGSHIP

Whole milk powder prices rose more than three-fifths between January and April 2013. Sales of flagship brand Kerrygold reached record numbers, with 350 million packs sold worldwide.

It is now the number one butter in Germany with a 17pc market share and the number one imported butter in the US.

But the company has also amped up its efforts in less core markets, installing new sales and marketing teams in Russia, China, Saudi Arabia and South Africa. About 25 young sales executives have been dispatched to these markets in the last twelve months.

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