Ireland’s main dairy cooperative aims to double its U.S. sales over the next six years, its top executive said, betting that Americans will be willing to trade up for more expensive, imported butter and cheese even amid already record dairy prices.
U.S. revenue for Irish Dairy Board, which sells Kerrygold brand cheeses and butters, roughly quadrupled over the past five years to just under $250 million in 2013, Chief Executive Kevin Lane said in an interview Monday. The company expects that to jump $500 million by 2020, making the U.S. one of its fastest-growing markets, he said.
“While consumers are eating more butter, they’re also becoming more selective about the butter that they’re eating, and they’re seeking a more indulgent experience,” said Roisin Hennerty, president of consumer foods in the cooperative’s U.S. division.
Irish Dairy Board and other butter producers are benefiting from shifting attitudes tow
ard the healthiness of fat consumption and a preference for natural foods. Those factors have spurred growing sales of butter in the U.S. for the past several years after decades of decline.
The cooperative, which represents Irish dairy farmers and processors, handles more than 60% of Ireland’s dairy products. It reported global revenue of €2.1 billion ($2.7 billion) last year, up 5% from 2012.
The cooperative plans a national television advertising campaign in the U.S. by early next year to play up the fact that Irish cattle are raised on grass pastures, unlike most dairy cows in the U.S., whose diets include grains and silage.
Kerrygold butters typically sell for around twice the price of private-label U.S. butters, Ms. Hennerty said. European butters also tend to have a higher fat content than those manufactured in the U.S., which Ms. Hennerty said makes its products creamier.
Irish Dairy Board is emphasizing the U.S. market partly because it is easier to pass on higher prices for raw milk to relatively wealthy U.S. consumers than to those in emerging markets who cannot afford it, executives said.
Benchmark U.S. milk futures continue to hover near all-time highs, buoyed by persistent gains in butter prices.
Mr. Lane said he expects the expiration of the European Union’s quota on milk production in April 2015 to bring more supply to market, which he said will help ease dairy costs.
Mr. Lane expects production by Irish dairy farmers to grow more than 50% over the coming five years to about 8 billion liters of milk in 2020 from just over 5 billion liters in 2015.
Source: Wall Street Journal
