Co-op must focus on consumer
The plan to reduce the number of product lines and focus on a few bulk products is foolhardy and the opposite of what’s needed.
Bulk products traded on the world market have tight profit margins.
In a market increasingly under pressure from other cheaper products such as soya, food ingredients and GM products, bulk products can only be seen as a means of disposing of a milk pool which cannot be put into value-added consumer products.
The plan to reduce the product lines must be seen against the background of an increasingly sophisticated consumer who wants choice and convenience and is prepared to pay a bit extra for them.
Viewed in this light an increased number of niche value-added consumer products is the way forward.
Value-added products and a diverse product portfolio generate extra profits and, consequently, extra employment.
Galtee/Dairygold have run some good marketing campaigns.
This expertise should be used to expand its consumer products range.
Sure, some products will not succeed and flexibility is needed to cut back or axe these and develop new lines.
A limited number of bulk products means axing lines and jobs.
Mr Henchy’s plan to diversify into food ingredients has merit but involves considerable risk. Here the manufacturing base and marketplace are dominated by the Kerry Group.
There are very limited opportunities for diversification through acquisition, and the alternative of greenfield development demands lots of capital, something Dairygold lacks at the moment.
If Dairygold, the sleeping giant, does not wake up to these realities, its future lies in takeover by one of the other major dairy companies, probably Kerry.
Kevin T Finn,
King’s Square,
Mitchelstown,
Co Cork.
