Grass-fed Reputation of Irish Dairy in USA
For many in the US, Ireland has now become synonymous with excellence in grass-fed dairy production characterised by our lush pastures and rolling green hills.
The US market has increasingly become a vital destination for the Irish dairy industry with exports reaching €359 million in 2020, more than a two fold increase in value over the last five years and contributing almost 16% to Ireland’s total growth in dairy exports within that same time period. According to the most recent CSO data, year to date (January to September 2021), 21% of all butter exports from Ireland were destined for US households, along with 6.1% of all cheese exports.
US consumers continue to prove their love and enjoyment of all things dairy. Last year, the average US consumer made their way through a record 297kg of dairy products representing a 1.4kg increase over the previous year. Both butter and cheese, the two most important categories for Irish dairy products in the US, have seen growth in consumption of 29% and 15% respectively since 2010.
Choice is King
The US as a whole is not homogenous and cannot be treated as a single uniform market when we consider the consumer. What is consistent from coast to coast is the priority placed on choice. US grocers can have double the number of products on shelf as their Irish or European counterparts. Nowhere is this more evident than in the dairy aisle.
Another important distinction between US and Irish grocery markets is in the number of retailers. Whereas in Ireland, five retailers account for the vast majority of grocery products bought, the US is far more fragmented with at least 200 banners, many of which operate only on a regional or single state basis. Examples include top ten retailer, H-E-B, operating 365 stores only in South Texas; and Wegmans, which is present in six states in the North East with 108 stores. While both are considered regional players, H-E-B and Wegmans account for over $32 billion and $10 billion in sales respectively, making them, and the US market generally, hugely attractive for brands, both domestic and imported.
By 2022 the grocery retail market in the U.S is forecasted to be $1.65 trillion adding an additional $5.9 billion in sales between 2020 and 2022 according to the IGD. Promotion of Irish agri-food and drink within these and other key partner accounts is the responsibility of Bord Bia and we regularly meet with the key purchasing decision makers to both reinforce the reasons to continue their commitment to Irish dairy and to give preference to Ireland above other sources.
Irish dairy success
In what is certainly a competitive category, with a very significant domestic industry, why do US consumers and our key trading partners repeatedly select Irish dairy? It is a category driven by quality and taste and Ireland, with a reputation for premium dairy products and natural grass-fed production, has managed the difficult task of both differentiating itself and communicating its outstanding taste versus the competition, both domestic and imported.
Few brands have captured the imagination of the discerning US shopper as has Kerrygold, with Bloomberg heralding the Ornua owned brand as having ‘Conquered America’s kitchens’ turning consumers into vigorous, brand ambassadors.
Quality Assured Grass Fed Irish dairy
In the US dairy market, the movement towards health and wellness and food choices as a lifestyle statement will only increase. For that reason, brand trust, which encompasses the integrity of the process involved in its making must be credible and withstand increasing scrutiny. Irish dairy has this credibility, with proof points provided by the Sustainability Dairy Assurance Scheme, and Origin Green, while our grass-fed credentials are now further reinforced by the Grass Fed Standard for dairy. All of these initiatives help to build brand trust with consumers and our key retail partners, thereby validating their choice in Irish dairy.
However, it must be noted that Irish dairy is not alone in occupying the position of grass-fed in the US with plenty of competition both from local and imported products vying for the attention of those same shoppers. Key differentiators such as natural, taste and product integrity will continue to be drivers for Irish products, justifying their premium positioning.
Looking towards the future, while innovation and new brand launches in the plant-based and dairy-free certainly seems set to continue, the majority of these have been alternatives to liquid milk options, consumption of which fallen out of fashion over several decades. The big players in the dairy space are keeping a watchful eye and taking a strategic approach. Danone is owner of the Alpro and Silk plant based dairy alternative brands, while Lactalis and General Mills have introduced plant based versions into their Siggi’s and Yoplait brands – all seeing these as complementary and incremental to their existing portfolio of dairy brands.
This category blurring has been a feature for some time now and many consumers, for whom as we have said before, choice is king, do not necessarily see dairy and non-dairy alternatives as an either-or but just that, an alternative. In the conversation about the rise of the dairy free movement, it’s important to note that consumers generally are increasing their intake of plant-based foods and seeking to reduce their animal product consumption rather than eliminate it completely. Consumption as with everything else is part of the overall sustainability agenda and consumers will continue to focus on what their own personal impact has on the environment, and on society more broadly, be that in packaging, food waste or energy usage.