Irish Dairy Board is a model co-operative

Press, 17 June 1982, Page 17

Irish Dairy Board is a model co-operative

From

SELWYN PARKER

in Dublin

When the former British Lions winger, Tony O’Reilly, became general manager of the then newly-created Irish Dairy Board in 1962, he was virtually unknown outside rugby circles and Irish farmers exported just over 3500 tons of butter to Britain and .nowhere else. This month the board turned 21. Today, O'Reilly is president and chief executive officer of H. J. Heinz and the dairy board has sales worldwide of $1469 million compared with $17.25 million in 1961 just before O’Reilly got to work.

By any definition it is an astonishing success story. In those hectic 21 years, building on O’Reilly’s five years as • general manager, the Dairy Board has:

• Established Kerrygold as arguably the world’s bestknown brand, in dairy produce marketing; • Become a recognised model co-operative that has attracted international study; • United initially distrustful farmers into a national milkproducing network; • Launched successfully a wide range of imaginative products that includes Just Juice, its. own brand of fruit juices, Irish mozzarella, and gouda among other specially cheeses;

• Set up in the early 1970 s

special manufacturing-mar-keting arrangements in Saudi Arabia.- '

In a typically irreverent speech O'Reilly, who flew back from America for the twenty-first birthday celebrations. recalled some of the obstacles the fledgling board had faced. One of them was the legendary suspicion of Jrish farmers. The board's first chairman, O’Reilly said, had taken him aside and warned him? "Tony, let me tell you one thing about the. Irish cooperative movement — and that is there will be no cooperation you’d notice;” ■ In fact, the Dairy Board steadily turned into a copybook'; example of ’ how to knock farmers’ heads together for their own good. It controls the entire industry from manufacturing to packaging. marketing, and distributing. Even the 8.8. C. paid tribute to its expertise by

using the launch of the Kerrygold brand name in a documentary called “Powers of Persuasion." Before the board decided to launch Irish butter under its own name (selected from two other alternatives — Shannongold and Buttercup), the produce had gone anonymously to Britain in bulk and been used merely for blending. The low quotas which the United Kingdom applied to butter imports (partly because of its commitment to New Zealand butter) meant that the board had to look for other markets at a time when most other dairy-pro-ducing nations had relatively captive markets. Says O’Reilly’s successor, Joe McGough: “No two markets were the same. We had constantly to alter techniques as-we went from one

market to another.’’-Thus the board became internationally marketing wise and nimblefooted in seeking sales, skills which stood them in good stead as the rush to export dairy products got increasingly crowded throughout the 19705. When Ireland joined the E.E.C. in 1972, sales had already built to $ll9 million, and the board was exporting butter, cheese, skim-milk powder, chocolate crumb, whole milk powder, butteroil, fresh and frozen. creams, long-life cream, casein, and other products, many of them packaged under the Kerrygold label. Thus, the opening of the E.E.C. markets was a godsend for an already diversified and hungry operation. • A year after joining the Community sales had rocketed to $3Ol

million. In 1972, the board took its first step towards a selfcontained operation in Britain, still its largest market, by buying Adams Butter (now Adams Foods), which gave Irish, farmers a valuable vehicle for United King-dom-wide sales'. Today, Adams Foods, which has grown steadily through, the purchase of smaller operations such as Lloyds Dairies (long-life milk),. Elkes, and Broadhursts Biscuits, has an annual turnover of $276 million. The idea was to try to rely less on the sales of butter which has a slender profit margin. In other ways the Dairy Board was quick off the mark. Before Ireland joined the E.E.C., Joe McGough had already anticipated entry and linked up with a West German importer and packer, V.R.M., and also signed contracts with the

West German co-operatives which dominate butter distribution within the country. Today, Kerrygold has nationwide distribution in West Germany, which is Irish butter's second-largest market after Britain. All E.E.C. countries, including Greece, now sell Irish dairy products. In the mid-1970s came what may turn out to be one of the board’s best moves. To tie down more outlets for its bulk products before each year’s seasonal, production, the board signed a number of long-term agreements, • such as the one in Riyadh, Saudi Arabia. / ’ ' . Il has part-ownership of a factory there which buys butter and skim-milk powder from the board and manufactures them into a range of products such as yoghurt which sell locally. It is effectively an investment and supply contract. After 21 years the Dairy Board’s attitude is still very much a go-go one. The current general manager, Brian Joyce, who once headed the Adams Foods operation, says that Irish farmers are capable of producing “at least 50 per cent more, milk than at present.”. Certainly, the board seems to be able to sell the stuff.