Glanbia secures second Irish butter deal
soon be able to reap synergy benefits, after agreeing to share some
elements of their dairy processing operations, Tom Armitage
reports.
Under the new arrangement, Connaught Gold will supply Glanbia with an unspecified volume of milk powder and in return, Glanbia will pack Connaught Gold's retail butter requirements.
Although no financial details of the arrangement have been disclosed, each company will retain separate commercial arrangements and contracts with their existing suppliers and customers.
A spokesperson for Glanbia told DairyReporter.com: "This is a small but positive initiative. We are constantly looking at opportunities to maximise our capacity utilisation."
Aaron Forde, Connaught Gold's chief executive, said the deal would allow both parties to maximise their "asset utilisation".
Last month, Glanbia received clearance from the Irish Competition Authority to acquire a €10.5 million contract to operate Dairygold's CMP branded liquid milk and cream business.
Dairygold is to sell its 28 million-litre CMP liquid milk pool on to Glanbia and in return, Glanbia is to manufacture a reported 20,000 tons of Dairygold's best-selling eponymous butter brand (and also butter oil) at its Ballyragget production facility.
John Maloney, Glanbia's group managing director, said at the time that Glanbia has a long history of co-operating with other milk processors and that synergy deals were viewed as a "sensible way forward for the industry."
Glanbia, one of the world's leading cheese processors, has previously said that it is "actively looking" at acquisitions, including some large-scale investments.
In recent years, however, analysts have claimed that the Irish dairy sector has been over-reliant on EU subsidies and has largely failed to make the necessary adjustments to remain on a competitive level with its European counterparts.
Meanwhile, earlier this month, 1,200 dairy farmers staged protests outside Glanbia's headquarters in Kilkenny, after it slashed its March farmgate milk prices by 4 cents per litre (around 2.7p).
Both the Irish Farmers Association (IFA) and Irish Creamery Milk Supplier Association (ICMSA) have vowed to take action against creameries which instigate further price cuts.
The IFA claims that Glanbia's recent cut equates to a 12 per cent reduction in farmers' revenues. Since 2001, Irish farmgate prices have fallen by 40 per cent to around 17.5 cents per litre (11.9p).
