€40m expansion churns out one million butter packs per day
The latest development in the Kerrygold story was revealed at the recent opening of a major expansion of Ornua’s Kerrygold Park butter-processing facility in Mitchelstown, Co. Cork. The €40m development facilitates the production of one million packets of butter every day
Kerrygold Park’s cutting-edge processing technology and infrastructure includes two state-of-the-art butter churns and 10 packing lines for a range of over 50 different product formats available across over 60 markets globally.
The recent investment in the facility has seen Kerrygold Park’s total cream-processing capacity grow significantly. Putting some context on that, Ornua’s interim CEO, Donal Buggy said: “We have doubled the size of the Kerrygold Park facility, going from a throughput capacity of 40,000t to 80,000t. To put that in perspective, one million packets of butter per day can be produced on the site. That will facilitate our growth ambitions, mainly in the US, over the coming years.”
The importance of Irish milk producers in this venture is not lost on Ornua, Donal said: “This is their butter-production facility. It’s their brand, their butter, and because they produce the best quality milk in the world, that allows us, in Ornua, to produce the best quality butter, so they are an intrinsic part of the Kerrygold story.”
Ornua originally took the production of Kerrygold butter in-house in 2016 with the development of Kerrygold Park. The growth in demand since then was not anticipated: “We thought the original plant would be sufficient for 10 years,” said Donal. “And five years later we had to build this additional production capacity to cater for the phenomenal success of the brand in international markets, driven largely by the US, though across the globe it sells phenomenally well. Kerrygold butter has caught the imagination of consumers, worldwide. America having such a large consumer population, that’s where the sales growth figures are most impressive.” Covid-19, in fact, contributed a lot to this growth as more people turned to cooking at home. Donal commented: “The Americans use Kerrygold butter as a premium ingredient in their baking and cooking and that has been a big driver of sales growth.”
Product consistency at Kerrygold Park is a key goal, Donal explained: “The primary reason for establishing the facility back in 2016 was to ensure total quality standardisation. With a premium brand, you must ensure consistency on the shelves anywhere in the world. That was the original aim.
“The new extension is, obviously, about extra capacity, as well as allowing us to engage in product innovation. We can produce our butter in different sizes, different formats, and different packaging in future. That’s what will drive premium value for our product.”
The consumer will pay more for the type of butter pack they want, and Donal cites the development of the Kerrygold butter stick packs as a prime example. “They are a new phenomenon for us here in Ireland. However, we studied the US market over several years and recognised that 70 per cent of American butter purchases in the States were for the butter stick format. The American consumer wants that format, and we weren’t providing it. Three years ago, we began producing a Kerrygold butter stick offering, on a limited basis, and now, with this processing extension at Mitchelstown, Ornua can really deliver the volumes required. Whatever format the consumer wants we will provide it.”
Ambitious growth targets
In relation to Ornua’s ambitions for Kerrygold, Donal commented: “Our ambition is to repeat what has been achieved over the past five years. We aim to drive the business on. In 2017, we announced that Kerrygold was a €1bn brand. We are now very near to announcing the achievement of a €2bn brand status, and then we will go for €3bn.”
But he acknowledged the current turbulence in international dairy markets: “We’ve had a tough year. Milk producers have had it tough, member co-ops and ourselves have had challenges because we entered this year with very high prices and then experienced a very quick fall through 2023.
“It was tough for Ornua with the Kerrygold brand because we were competing against products internationally that had a lower price than Ornua would have had with stock held over from 2022. We have managed our way through that, and the good news is that we have seen a stabilisation in commodity pricing across the world in the last few weeks.
He continued: “The Global Dairy Trade (GTD) index had a four-in-a-row set of increases, albeit off very big decreases over the past nine months. There is hope there in those positive figures. What everyone needs, the producers, the co-ops and ourselves, is a gently growing price that provides a stable market. That would be good for everyone. The volatility we have experienced over the past two years is not good.”
A key economic development
Kerrygold has already passed the milestone of being Ireland’s most successful food export brand, a point highlighted by Ornua’s chair, Aidan O’Driscoll during his address to the large gathering in Mitchelstown. Enterprise Ireland, which provided significant financing for the expansion project, was represented by Jenny Melia, an executive director with the organisation. As a result of the investment in Kerrygold Park, Ornua has also expanded its direct employment at the facility with 30 new jobs bringing the total Kerrygold Park workforce to 180 employees.
What was also notable at the launch was the large numbers of milk producers present, representing many of the co-ops who supply Ornua with its base product to process into Kerrygold butter and a range of other dairy produce.
The expansion of Kerrygold Park follows the recent launch of a major new global advertising campaign which is expected to reach more than 150 million consumers around the world in the coming 12 months.