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Irish Milk Quality Driving Casein Market Success

Margaret Butler, Dairy Ingredients Manager, Bord Bia

Ireland is renowned for its production of superior quality, highly functional, grass fed dairy products. That reputation extends itself to casein and caseinates; two protein dense, value adding and highly functional dairy products of which Ireland is one of the most technically dexterous and advanced producers in the world.

Casein and Caseinates Market

Ireland is the second largest exporter of Casein in the world. In 2019, Irish exports topped 55,000 tonnes reaching 50 countries, just behind New Zealand’s export total of 57,000 tonnes.

The US, Mexico, Spain, Italy and the Netherlands are our main export partners and between them last year accounted for close to 65% of all Irish casein exports.

For the first five months of 2020, the value of Irish casein exports has increased over 36% to €122.9 million and in volume terms is on par (18,000 tonnes) with the same period last year. 

While New Zealand is the largest caseinate producer by far with exports in excess of 30,000 tonnes, Ireland is the third largest, exporting approximately 2,200 tonnes in 2019 the lion’s share of which was exported to Netherlands, Denmark, Germany and United Kingdom

Market Performance and Outlook

Casein and Caseinates are grouped amongst the more high value dairy ingredients and powder products owing to both their functional and chemical composition. However both are subject to price volatility and market dynamics.

It’s probable that the impacts of Covid-19 have not yet materialized and by and large, there remains ambiguity surrounding dairy markets and demand for the second half of the year.

Our industry’s agility to navigate what has been a very challenging year for dairy ingredients has manifested in robust export value and volume statistics for the first five months of this year.

Solid, knowledge-based relationships between our dairy exporters and global customers will remain key differentiators for Irish dairy ingredients into the future.

Seamus Greene, Managing Director of Ornua Ingredients Ireland looks at the Mexican Market.

As the world’s 12th largest economy, Mexico has a population of over 130 million with per annum population growth of, on average, 1.8% in the past five years. As a dairy deficit region, it can only produce two-thirds of its dairy needs and with population growth, and demand for dairy, expected to continue to exceed growth in milk production it will continue to rely heavily on imports.

Mexico is the second largest importer of Casein in the world with overall import volumes increasing by c.40% in the last six years alone. 90% of these imports come from Ireland and New Zealand. Today, Casein has a market value of $100 - $120 million USD annually. Ornua currently operates a 26% market share with aspirations to grow that significantly in future years.

The popularity of Irish exports is attributed to the quality of grass-fed Irish dairy coupled with Ornua’s local sales infrastructure and the strength of key customer relationships spanning decades. The consistent quality of grass-fed Irish dairy products lends itself to bespoke recipe formulation of end use products such as Oaxaca cheese - a popular cheese commonly found on tacos. This, coupled with guaranteed supply, makes Ornua a preferred and trusted partner.

The Mexican market is not without its challenges – customer sentiment is affected by macro-economic conditions including currency volatility, political uncertainty, and high unemployment rates of 3.8% (pre-COVID-19). Pre-Covid average household income stood at around USD $2,529 per quarter. Business security, market risk, lengthy credit terms and ambiguity surrounding food safety laws result in a difficult trading environment. Ornua’s long standing relationships in-market enable the business to trade effectively in the region.

Notwithstanding the challenges, more recent trading developments have opened up additional opportunities in Mexico. The EU-Mexico Free Trade Agreement due to be ratified by the European Parliament and Mexican Senate expected in 2021 will enable Ornua to expand its offering into products like skim milk powder, cheese and butter. Ornua is a strong position to leverage this reduction in tariffs to strengthen our route to market for Irish dairy in Mexico in the coming years.

What is Casein?

Casein is a protein dense powder and as a dairy ingredient is mainly utilised for its high protein content and emulsification properties. Its application includes the production of analogue cheese mainly for pizza toppings, yoghurts, liqueurs, bakery/confectionary, pharmaceutical and sports nutrition products. Its slow digesting properties make is popular for sports nutrition products.  Casein also provides texture and binding properties in confectionary products. Casein is also widely used in non-consumable and textile products including adhesives, plastics and cosmetics.

The two main casein specifications are acid and rennet casein and both are derived from pasteurised skimmed milk and distinguished by either the addition of an acid or a rennet enzyme.

What is Caseinate?

From acid casein, caseinate can be produced which in effect is a neutralised protein powder, owing to the addition of an alkaline ingredient, such as sodium hydroxide.  Unlike casein, caseinate is soluble in water and therefore has wide ranging functionality as a dairy ingredient including viscosity, temperature stability, and emulsification and is an excellent protein source (90% protein). Applications for caseinate are manifold and include coffee creamers, milk replacer, meat products, soups, salad dressings and nutritional food and beverages.

Calcium Caseinate is produced by adding a calcium compound, typically calcium hydroxide.  In so doing, functionality and application extends to whitening and ‘dispersability’, desirable functions for the production of coffee creamers, milk replacers and desserts as well as adding mineral fortification.