Business Irish

Tuesday 19 November 2019

China's love for our cheese and milk boosts Dairygold's profits

Demand for dairy and meat products soars among prosperous middle class

TURNAROUND: Dairygold chief executive Jim Woulfe
TURNAROUND: Dairygold chief executive Jim Woulfe

Louise McBride & Darragh McCullough

A new love of Irish cheese, butter and milk amongst the Chinese middle class has helped to boost the profits of Ireland's largest farmer-owned business, Dairygold, over the last year.

Dairygold, which is the second biggest milk processor in Ireland, saw its profits jump by about 25 per cent last year as demand for milk, cheese and butter soared.

The Sunday Independent has learnt that Dairygold's profits for the 2013 financial year are almost €26m, up from €20.6m in 2012.

This represents a marked turnaround in Dairygold's fortunes – five years ago, the farmer-owned co-op was barely making a profit. Dairygold is due to officially announce its profit for 2013 in a few weeks.

"It's been a very strong year for the Irish dairy sector," says the food economist Ciaran Fitzgerald. "Some of that is down to an underlying increase in global demand for dairy products.

"In addition, there's an emerging middle class in Asia and as they become more prosperous, the demand for sophisticated dairy and meat products is increasing. You are seeing that right across Asia, particularly in China."

Earlier this year, Bord Bia boss Aidan Cotter said that China could soon be Ireland's second largest market for food and drink – after Britain.

The late spring of 2013, which triggered a fodder crisis for farmers, also boosted demand for Dairygold's milk last year, says Fitzgerald.

"The bad weather in the first few months of 2013 meant that milk production in Ireland and the EU was low," said Fitzgerald. "The supply of milk was therefore down from a few key areas, including Ireland. That fuelled more demand for Irish dairy products."

The rising use of infant milk powder worldwide has also boosted the Irish company's fortunes.

Dairygold is a big supplier of whey powder – which is used to manufacture infant formula.

Demand for infant milk powder is particularly strong in China and the centralised Beijing distributors (which had previously largely relied on New Zealand for their stocks of formula), have recently started to buy it from Europe and the US.

A spokesman for Dairygold declined to comment on the co-op's profits.

As the value of Irish food and drink exports approached €10bn for the first time last year, many Irish food businesses have done well.

Dairygold has strong ties with the diary giant, Glanbia, which itself saw profits jump by almost a fifth to €176m last year. Last year, Glanbia became the first major Irish food company to appoint a women – Siobhan Talbot – to the helm. Another major Irish food company, Kerry Group, which is behind well-known brands such as Denny sausages and Charleville cheese, saw its trading profits increase by 9 per cent last year, according to preliminary results released in February.

Sunday Indo Business

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