Despite a year of protracted low prices together with high stocks and poor demand the Irish Dairy Board (IDB) reported satisfactory financial results for 2002 with a turnover from continuing operations increasing by 1.4 per cent to €1.89 billion. The strong performance of the group's overseas subsidiaries contributed significantly to the overall performance.
In the UK, the board's largest UK operating subsidiary, The Kerrygold company, continued on its upward curve, reported a very successful year despite intense competition in the UK retail market. Adams Food Ingredients also performed well and Dairy Ingredients UK, an outlet for Irish butter, had a very satisfactory year, reports the board.
North Downs Dairy Company performed well although 2002 cheese market conditions were challenging and margins were inevitably reduced in a generally weak market for mature cheese. The Pilgrims Choice brand increased both market penetration and sales to become the number two cheddar brand by value in the UK.
In the US, the DPI Group had a successful and profitable year, boosted by a preferred distributor agreement for gourmet food products concluded with one of the major US national retail chains. The board noted that apart from the direct benefits to the group as a whole this agreement paves the way for similar national programmes with other major US food chains in the future.
Worldwide sales of Kerrygold branded products, that this year celebrated its 40th anniversary of the first launch of Kerrygold branded butter in the UK - were up almost 4 per cent on 2001, with most markets showing increases in turnover.
While the UK yellow fats market declined by 2 per cents Kerrygold butter sales increased. The appeal of spreadable butter appears to be on the up as the Irish board reports that sales of Kerrygold Spreadable tubbed butter grew by more than a staggering 40 per cent on 2001.
Germany continues to be the most important consumer market for Kerrygold with the brand accounting for 13 per cent of total butter sales despite a decline in per capita consumption. Kerrygold cheese sales in Greece continued to perform strongly, increasing nearly 10 per cent in 2002. In Spain, Kerrygold butter maintained sales levels while branded cheese sales increased by 6 per cent despite the general economic downturn and fall in tourist numbers. The Belgian market for Kerrygold also performed well last year increasing market share.
Across the Atlantic, according to the board, the US proved to be a very successful market for its branded products with sales growing by 19 per cent in 2002 and new business generated across all product categories. Despite a weak domestic dairy market, and aggressive competitor activity, 'sales of the extended Kerrygold cheese range and Kerrygold butter were excellent,' reports the board. Adding that listings in the key major retail supermarket groups across main urban and population centres of the country, should ensure growth opportunities in 'this strategically important market in the future.'
Despite the positive results during a testing global market, IDB managing director, Dr. Noel Cawley warned:"Improved world market demand, coupled with drought induced output restraint from Australia, should lead to more favourable world market conditions later in the year.
However the substantial weakening of the US Dollar and Sterling means that any improvement in returns expressed in Euro could be modest".