Ornua circle the wagons on Kerrygold’s US presence

Farm organisations hit out at Glanbia for launching rival brand in the States

ORNUA has insisted that it will defend the premier position of its “iconic” Kerrygold brand in the US market against the threat posed by Glanbia’s Truly Grass Fed dairy range.

The recent launch of Glanbia’s brand in the lucrative US market provoked an angry reaction from the farm organisations, who accused the Irish dairy giant of targeting Kerrygold. This assertion was rejected by Glanbia.

Ornua admitted that competition from Glanbia’s Truly Grass Fed range could undercut Kerrygold’s premium position in the US, but it played down suggestions of a price war between the Irish companies.

“Any product that competes on price will undercut this [Kerrygold’s] premium position and will inevitably erode value for Irish dairy farmers,” Ornua told the Farming Independent.

“Ornua has responded in the market with temporary price promotions in a small number of retailers, as we would with any other competitor entering the space,” the marketing body stated.

“Flexibility on pricing in the immediate term protects Kerrygold’s premium brand position into the future. By protecting this premium, this value is delivered directly back to Ornua’s members, and in turn Irish dairy farmers.”

Ornua, which is owned by the Irish dairy co-ops including Glanbia, pointed out that Kerrygold was the number two butter brand in the strategic US market and that this was the direct result of “brand investment for over 25 years”.

“This level of investment was made possible by Irish farmers. The combination of a world-class product with a well-invested brand has secured phenomenal growth in the USA and many markets around the world,” Ornua maintained.

The US market has been a key outlet for Kerrygold in recent years, with butter sales growing by 21pc in 2017.

Glanbia has rejected suggestions that it targeted Kerrygold’s market share in the US and claimed that its Truly Grass Fed range was aimed at “a growing niche of informed consumers seeking verifiable claims on their food labels”.

Glanbia insisted that it remained a strong supporter of Ornua, as its largest shareholder, and fully backed the concept of centralised marketing of Irish dairy produce.

However, strong criticism of the Glanbia’s US move by the IFA has been echoed by ICOS and ICMSA.

Duplication

“While continuous innovation and product diversification are an essential part of the future growth and development of the Irish dairy co-operative industry, it is also essential that such important processes should avoid duplication of resources, investment or any dilution of existing competitiveness by the industry in key markets,” ICOS said.

“The fact that the Kerrygold brand is now worth close to €1 billion is a testament to the farmers who have funded it through levies over decades, and it shows what can be achieved when we as co-ops combine our efforts.”

An ICMSA spokesperson said that Irish companies competing against each other in a very valuable export market was not in the interest of the farmer-producer.

Last week IFA said it was “extremely concerned” at Glanbia’s launch of the Truly Grass Fed brand in the US.