Kerrygold is a lockdown winner as sales surge

Dairy co-operative Ornua reported record operating profit of €83m for 2020, a 69pc jump on the prior year.

The performance boosted by increased cooking at home during the pandemic.

However, turnover was up just 0.9pc to €2.3bn, according to its annual results.

“There’s been a huge shift in people eating at home,” John Jordan, Ornua CEO, said.

“[With] at home demand, both for meals and things like baking, consumers have gone back to brands they trust and know well, Kerrygold has been a real beneficiary of that,” he added.

The difference in the increase in turnover and the much larger increase in profit is mainly due to lower margins in the food service business.

“Our food service business, which is generally higher volume, lower margins, that has been dramatically down, and our branded side of the business, which tends to be slightly lower volume but higher margin [is up], so that product mix of where we’re selling that has impacted the turnover,” Mr Jordan said.

Earnings before interest, taxation, depreciation and amortisation of €107.4m were up 49.6pc year-on-year.

Ornua said the performance was achieved against the backdrop of “a complex trading environment dominated by Covid-19, market volatility, and the macro-economic challenges of Brexit and punitive US tariffs.”

However, it warned that this financial performance is “unlikely to be repeated” as the retail and foodservice landscape around the world re-adjusts to the re-opening of economies post-pandemic.

Ornua, which exports to over 110 countries, saw sales of its flagship Kerrygold products increase by 13pc year-on-year, selling over 10 million packets of butter and cheese a week.

In the United States, Kerrygold has become the preferred dairy brand for 10pc of consumers, establishing it as the number two butter brand, according to the co-op.

During the year Ornua expanded its ingredients facility in North America, increasing growth capacity by 30pc.

Kerrygold butter continues to be the fastest selling brand on supermarket shelves in Germany.

Pilgrims Choice cheese saw 29pc growth year-on-year, securing its position as the number two cheddar brand in the UK market, the co-op said as dairy products sold in Britain are not subject to tariffs.

Nonetheless, under the new trading arrangements, “it’s a much more bureaucratic and administrative system. It adds cost, it adds time,” Mr Jordan said.

Over the past few years the UK has become a smaller part of Ornua’s portfolio, “albeit huge importantly,” Mr Jordan said.

“I think that trend will continue, our reliance in the UK will decrease over time, but it’s still very important,” he added.

Ornua delivered a 54pc year-on-year increase in the brand premium and bonuses paid to co-op members with a record €68.7m ‘Ornua Value Payment.’

Looking ahead, Mr Jordan said the co-op is “cautiously optimistic” about the gradual re-opening of economies as the global Covid-19 vaccine rollout gathers pace.

Going forward the co-op will be less concerned about turnover, much more concerned about capturing as much value as possible in all its routes to market, according to Mr Jordan.

Online Editors