Tuesday 20 March 2018

Dairy chief has big plans to milk emerging markets

THREE years ago Kerry native Kevin Lane took over the helm of the Irish Dairy Board (IDB).

Despite handling nearly half of the output from Ireland's entire dairy sector, the IDB at the time was attracting more and more criticism from industry leaders and, indeed, the 18,000 dairy farmers who supplied it with product.

The main complaint was that Ireland's once small rural dairy co-ops had out-grown the umbrella organisation that had been set up in the 1960s to help them sell their product internationally.

Those same co-ops are now multi-billion euro concerns in their own right, with their own marketing and international sales teams.

Gradually, more and more product was by-passing the IDB's clearing house as household names such as Glanbia, Kerry and Dairygold developed ever-closer relation- ships with their clients.

Just before Mr Lane's arrival in January 2010, the IDB also went through its own annus horribilis when it got caught with a lot of expensive product in a collapsing market.

Farmers were anxious. They knew that they could increase their output by up to 50pc when the EU milk quota regime ceased in 2015, but would the extra milk be sold at a loss?

The new CEO came with the promise of doing things 'the Kerry way' – a reference to Mr Lane's 22 years with Kerry Group rather than his southern roots.

Subsequent strategic reviews highlighted the need for a much stronger pipeline of new product development if the IDB was to have any hope of succeeding in its mission to capture new markets.

It also revealed huge scope for better leveraging of the IDB's golden goose – the Kerrygold brand.

Three years later, it looks like the Kerry way is beginning to deliver the goods.

Kerrygold butters and cheeses continue to defy expectations, with sales turnover in Germany this year predicted to be 19pc higher.

All this despite the fact that these are age-old products being sold at massive premiums in 'mature' markets.

Much of this is on the back of the massive success that the launch of the spreadable versions of the butter, where tweaks such as flavoured butters and sliced cheeses are all helping the brand gain market share.

But the real game changers for the IDB will be the success or otherwise of their new ventures in emerging markets.

Billed by Mr Lane as one the greatest opportunities at the moment, dairy consumption in the Middle East and North Africa is growing at about 10pc per annum, 10 times faster than Europe.

He has succeeded in getting his R&D department in Teagasc Moorepark to perfect a technology that allows milk powder to be reconstituted into an 'as fresh' cream cheese called Labneh, which is hugely popular in the Middle East.

The IDB are currently carrying out due diligence on a massive new investment in processing facilities believed to be linked with the production of this cheese in Saudi Arabia's capital, Riyadh.

It could be the start of a series of investments in new markets around the world for Mr Lane's team.

Irish Independent

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