Glanbia to take over CMP milk business

DAIRYGOLD is to exit liquid milk production as part of a major plan announced yesterday for the restructuring of its core multi-million euro turnover dairy processing business.

The main feature of the plan is that Glanbia will take over the CMP liquid milk, cream and juice branded business in Cork in a €10.5 million deal that is subject to Competition Authority approval.

Dairygold’s four Co Cork based milk manufacturing plants, in Mitchelstown (2), Mallow (1) and Mogeely (1), are being retained despite earlier indications that two or possibly three of them would be axed.

Butter manufacture will, however, cease at Mallow, which will continue to produce whole milk powder but only during the peak summer months, with the result that local fears have arisen about the plant’s future.

Dairygold also announced that a food ingredients business will be bolted on to the co-op’s powder operation.

Commodity cheese, casein and whey will be produced at the two Mitchelstown plants which are to be placed under a single management structure and will, in essence, work as one plant.

The Mogeely plant will be occupied completely with the production of non-commodity continental style cheeses including Regato, the market leader in Greece, and the production of Jarlsberg cheese for the European market.

Dairygold also confirmed that it has completed a long-term contract for the supply of Jarlsberg cheese, which is Norway’s primary cheese export and America’s best selling imported cheese.

It said this contract, coupled with the co-op’s new cost structure, has secured the immediate future of its Mogeely plant.

An estimated 90 jobs will be lost in the restructuring of the milk division which employs some 500 people. Thirty-eight of the redundancies will be in CMP milk processing.

About 30 jobs will be shed in Mallow and the remaining 22 or so in Mogeely and other Dairygold operations. Some 58 CMP liquid distribution staff will transfer employment to Glanbia. CMP’s 17 acre Kinsale Road site is valued at over 20m, and could be redeveloped for offices, retail warehousing or apartments if sold.

Dairygold has now shed over 1,200 jobs as part of a major restructuring programme over the past fourteen months.

Glanbia and Dairygold have also agreed in principle to enter into a contract manufacturing arrangement for elements of their respective milk processing activities.

Dairygold confirmed that it has also been talking with Enterprise Ireland to explore the establishment of a food sciences R&D facility in Mitchelstown and hopes to have proposals in this area fully developed over the next six months.

The liquid milk development includes the relevant sales and distribution assets of CMP but excludes the production and chill facility. Under the new arrangement, the 130 liquid milk suppliers will continue to supply Dairygold.

Dairygold will sell the 6.15 million gallon CMP liquid milk pool on to Glanbia, which will continue to supply the CMP milk, dairy and juice brands into the Cork area.

The agreement in principle by both companies to enter into a manufacturing arrangement for elements of their respective milk processing activities is subject to finalisation of contract negotiations.

Under this agreement Dairygold will supply a volume of cream to Glanbia annually, beginning in 2005.

This will be for the contract manufacture of Dairygold branded butter and butter oil at Glanbia’s Ballyragget production plant.

In addition, Glanbia will purchase a volume of whey from Dairygold for processing.