Dairy Board in expansion drive

THE Irish Dairy Board (IDB) is about to embark on an ambitious expansion drive in overseas markets, according to its chief executive Kevin Lane.

Underperforming units will be sold off to fund this drive, with a likely push for sales of cheese and whole milk powder in Africa, the Middle East and China.

Key acquisitions are also on the cards in the target markets, and new facilities may also be built similar to the €11 million cheese manufacturing operation due to open in Manchester next year.

Decisions on this planned drive are likely to roll out soon after the IDB’s board meeting on December 7. The board has already indicated a will to move up a gear, having engaged in a global analysis of the group’s strengths and weaknesses, with all 4,000 employees invited to identify the IDB’s most likely profit opportunities.

“We came up with 45 strategies for growth,” Mr Lane told attendees at the Irish Co-operative Organisation Society (ICOS) national conference in Dublin. “We have a €2 billion business which makes about a €30m profit. That’s just a 1.5% return. We have to work hard to change that low level of profitability.”

“We have also identified businesses within the group that are not part of our long-term future. We will have to divest ourselves of low-growth businesses to generate cash, and acquire companies that are strategically relevant,” he added.

The IDB’s group-wide analysis also showed that butter will not be a growth product – hence the focus on cheese and WMP sales.

The global dairy market is expected to grow by 3% per annum between now and 2013. The European market is close to saturation point, bar Spain and Italy where some growth opportunities are still likely. This has led IDB to focus on the 1.7% growth forecasts for the emerging nations it plans to target, plus 6%-8% predicted for the group’s identified high-growth potential products in China.

The IDB’s primary function is the promotion of Irish dairy products in international markets. Mr Lane also told the ICOS delegates that possible collaborations with larger global players such as the New Zealand group Fonterra might also be part of the IDB’s growth strategy.

On the domestic Irish front, the IDB said its efforts to drive sales of Irish dairy products in overseas markets would clearly be enhanced if it were the sole representative body for 100% of the product coming out of the country.

At present, the IDB only represents 60%. Mr Lane described this situation as a nonsense, and urged producers to bring the other 40% of dairy product in under the one umbrella body.