Irish dairy cooperative Ornua has reported ‘record retail sales’ for its Kerrygold brand on the way to full-year revenue of €1.75 billion.
The company’s results for 2016 show that turnover was 9% higher than the year before, with operating profit of €26.6 million.
But the major highlight was sales of Kerrygold products worth €900 million, driven by 20% volume growth in the US market. In September, the company announced a 50,000-tonne butter production and packing plant in County Cork, Ireland, which will help to support Kerrygold’s continuing growth.
It’s a positive sign for Ornua, which plans to turn Kerrygold into a billion-euro diversified dairy business. Ornua claimed that the successful launch of Kerrygold yogurts in Germany, with more than ten million pots sold in the first six months alone, was testament to its potential within the broader dairy sector.
Ornua CEO Kevin Lane said: “We are very pleased to report a strong 2016 performance. Excellent performances in established markets such as Germany and the US were accompanied by continued expansion in our developing markets of Africa, China and the Middle East. These results were achieved against a backdrop of significant market volatility and political uncertainty.
“We have built a diverse global business by investing in our brands, technology, in-market presence and our people. Ornua now exports to over 110 countries around the world. This strategy is ensuring our ability to continue to deliver for our members and for the Irish dairy industry, even in more uncertain market conditions.”
Analysis: ‘Future-proof’ dairy
Kerrygold’s decision to branch out into new categories, with this goal of becoming a billion-euro dairy brand across as many categories as possible, should come as no surprise given the plight of margarines and spreads. It hopes to be able to future-proof itself by adding more profitable categories, like yogurts, to its overall product mix. Otherwise it might find itself in a similar situation to Unilever, which is to sell off its underperforming spreads business including brands like Flora and Stork.
With the news, the question instantly turns to who will swoop in and take the brands over. But with Unilever CEO calling margarines ‘a declining segment’, any potential buyer will need to realise some serious synergies in order for the deal to be worthwhile. So who might be tempted by Unilever’s spreads? [Read more…]
During 2016, Ornua also opened a new facility in Saudi Arabia, upgraded the existing production facility at Neukirchen-Vluyn in Germany and developed a purpose-built production line for yogurt brand EasiYo at Ornua Nutrition Ingredients UK.
In January, Bord Bia announced that Irish food and drink exports had exceeded €11 billion for the first time.
Ornua’s recent acquisitions
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