Glanbia becomes one of leading cheese and whey producers in US

Glanbia is now one of the leading cheese and whey producing businesses in the US, according to a report by Davy Stockbrokers.

Having scaled up the size of its US sports supplements business, Glanbia’s scale is now “well in excess of the industry average” for the US, notes Davy. Based on the latest USDA data, Davy notes that Glanbia’s share of US production of whey protein isolate (WPI) is estimated at 21%.

“It is the biggest producer and user of this prized ingredient in sports nutrition supplement,” states Davy analyst John O’Reilly. “Furthermore, we estimate its share of total American-type cheese output in 2011 at more than 18%.

“The USDA data allow us to appreciate the comparatively large scale of Glanbia’s cheese and whey processing assets in the US. In each case, its scale is well in excess of the industry average.

“Even in the context of cheese manufacturing plants in the western US, where output per plant is large compared to other regions, Glanbia’s plants — especially Southwest Cheese in New Mexico — are comparatively large.”

The Davy analyst said that Glanbia has experienced particularly strong growth in its WPI 90% plus (ie, whey protein isolate of 90% plus protein content). This is one of the ingredients most in demand for powder and beverage sports supplements in the US currently — and increasingly observed in Irish sports/fitness activity too.

It is also a key product for the infant formula sector. Glanbia is investing in a WPI facility at its Kilkenny plant. In the US, it produces it in Idaho and New Mexico. Glanbia is the biggest producer and user of WPI in the US, which its uses for its Optimum Nutrition sports nutrition supplements business.

“We believe that Glanbia’s WPI output is of the order of 6,500 tons, equal to 21% of US output of WPI in 2011 on USDA’s production data,” states the Davy report. “This puts its 2011 WPI-to-cheese output ratio at 1.6%, 2.7 times the US average.

This is explained by its scale cheese production which generates whey in sufficient volume to justify investment in WPI.

If Glanbia is removed from the WPI data, the average annual output per plant for the other 12 plants was 1,980 tons; Glanbia’s average output per plant on our estimate was 3,250 tons.”

Glanbia primarily operates in the west, a region which over the past two decades has exploded in terms of milk and dairy product production, moving it from an insignificant to a dominant position over the period.

Davy notes: “For instance, in 2011 the west accounted for 50% of total American-type cheese output. Large as the average plant size in the west is relative to plant size in other regions and the US overall, the west’s average plant size is way below that of Glanbia.”

Based on Glanbia’s cheese output and that recorded by USDA for Idaho and New Mexico, Glanbia’s share of total cheese output in each state is also close to 50%. Its share of total US American-type cheese output in 2011 was 18.5%.


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