Annual Report 2014

Our Global Footprint

IDB Export Markets
IDB Key Subsidiaries
Sales & Business Development Teams
Afghanistan
Albania
Algeria
Angola
Australia
Austria
Bahamas
Bahrain
Bangladesh
Barbados
Belgium
Benin
Belize
Bermuda
Bulgaria
Burkina Faso
British Virgin Islands
Cameroon
Canada
Cayman Islands
Central African Republic
Chad
Chile
China
Congo
Congo (Democratic Republic of)
Costa Rica
Cyprus
Czech Republic
Denmark
Dominican Republic
Egypt
El Salvador
Equatorial Guinea
France
Gabon
Gambia
Germany
Ghana
Gibraltar
Greece
Guinea
Guyana
Hong Kong
Hungary
Iceland
India
Indonesia
Iran
Iraq
Ireland
Israel
Italy
Ivory Coast
Jamaica
Jordan
Kenya
Korea (Republic of)
Kuwait
Latvia
Lebanon
Liberia
Lithuania
Libya
Madagascar
Malawi
Malaysia
Maldives
Mali
Malta
Mauritania
Mauritius
Mexico
Morroco
Mozambique
Netherlands
New Zeeland
Niger
Nigeria
Norway
Pakistan
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russian Federation
Sao Tome & Principe
Saudi Arabia
Senegal
Seychelles & Dependent
Sirra Leone
Singapore
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Taiwan
Tanzania
Thailand
Togo
Trinidad & Tobago
Tunisia
Turkey
US
United Arab Emirates
United Kingdom
Uzbekistan
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe

No.1

No.1 butter brand in Germany

26% year-on-year revenue growth

No.1

No.1 imported butter in the US

Over 3 million Kerrygold tastings a year in the US

Millions

100s of millions of packets of Kerrygold butter sold each year

No.2

Pilgrims Choice is No. 2 cheddar cheese brand in the UK

Exports to over 110 countries worldwide

Over €2.3 billion Turnover

Ireland’s largest dairy exporter

Over 3,000 staff globally

Over 50 years’ experience

2014 Global Markets –
A Year in Review

2014 opened with prices close to the record highs that had been achieved in 2013. Excellent returns and output conditions, combined with relatively low input costs, stimulated milk output to a very significant degree for much of the year.

Milk supply volumes surged across the world’s major dairy producing regions; the EU alone adding over 6 billion litres to its output, the US and New Zealand another 3.5 billion between them. The pattern of increased supply was clearly seen closer to home. Milk supplies in Ireland were up approximately 4% on the previous year, while in the UK, growth was even stronger at 9%.

The greatly increased supply proved to be more than global demand could absorb, and prices fell heavily from the Spring, with dairy commodities losing as much as 50% of their value by year-end.

Demand weakness was evident in dairy’s two most important import markets, Russia and China, but for very different reasons.

Political difficulties closed the Russian market to EU and US dairy trade from August, depriving Europe especially of an outlet for product which in previous years had accounted for more than 30% of cheese exports and 28% of butter. As this product struggled to find new buyers, prices fell.

In China, massive over-purchasing of whole milk powder in late 2013/early 2014 led to a stock-build of, by some estimates, as much as a year’s worth of import requirements. This over-buying was driven by fears in China over security of supply (arising out of drought-related scarcity experienced in late 2012/early 2013) and by speculative purchasing as prices rose dramatically in 2013.

The realisation of large stock-build by market actors, coupled with greater domestic and international availability of product and lower demand (due to high pricing) caused a sudden and dramatic collapse in buying from the end of the first quarter. Chinese buyers are not expected to re-enter the market in a meaningful way until mid-2015, once surplus stocks have been run down, and domestic demand recovers.

The return of these significant buyers will be very important in providing a sustainable lift to market prices in the year ahead. Despite these negatives, there were also some important positives to note on the demand side in 2014.

Butterfat demand reached a 40 year high in the US, and had a very welcome lift in Europe as a more positive consumer attitude took hold (backed by a healthier understanding of the nutritional aspects of butter versus alternatives), and a trend towards home-baking gained ground.

This return of butter’s popularity was epitomised by its appearance on the cover of Time magazine in June, accompanied by an article declaring an end to the ‘war on fat’. The end of the year brought some early signals that the dairy market was beginning to stabilise and pick up, although from very low levels.

A weakening Euro added to European export competitiveness vis-a-vis the US and New Zealand, and buying activity picked up as customers sought to replenish stocks with low-priced product. This pick up in prices is in some part due to an anticipation of reduced global milk and product supplies in 2015 although the abolishment of EU quota from 1st April will support increased flows within Europe. We await to see if this will be the case.

In this section: