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Dairy Sector Profile

Sector Summary

Ireland’s dairy industry is built on the family-farm tradition. These 17,500 family run dairy farms utilise about one quarter of the grassland area in Ireland. Irish dairy herds enjoy on average 240 days per year out on pasture, with 95% of their diet consisting of grass. Ireland has the longest growing season in the northern hemisphere. This advantage is bestowed on the country by virtue of its island location on the western edge of Europe, with a temperate climate, plentiful rainfall and rich deep soils.

Ireland has a population of less than five million people, yet it produces enough dairy to feed multiples of that. What Ireland produces is influenced by its seasonal grass growth and its dairy production is focused on cheese, butter, powders and dairy ingredients.


Bord Bia’s Vision for the Irish Dairy Sector:
To be the world’s most trusted exporter of sustainably driven and technically advanced high quality dairy products to customers worldwide.

Domestic Growth

In 2019, Ireland produced 7.9 billion litres of milk, it was 5% increase in milk production compared with 2018 figures. In addition to the growth in milk production volumes, there has been an increase in both fat and protein levels in Irish milk deliveries in recent years. Looking ahead to 2020, Irish milk production is expected to exceed 8 billion litres for the first time driven by increased cow numbers and better cow genetics.

In 2019, Ireland produced 7.9 billion litres of milk, it was 5% increase in milk production compared with 2018 figures. In addition to the growth in milk production volumes, there has been an increase in both fat and protein levels in Irish milk deliveries in recent years. Looking ahead to 2020, Irish milk production is expected to exceed 8 billion litres for the first time driven by increased cow numbers and better cow genetics. Irish dairy cow numbers, as recorded in June 2019 stood at 1.5 million, an increase of 1.6 percent on 2018 numbers (CSO, 2019). The overall picture is a 40% increase on 2010 dairy cow numbers. (Teagasc 2019). Since the abolition of quotas in 2015, Irish dairy sector is striving to be a global leader in the development of a high value, environmentally sustainable dairy industry based on our extensive grass-based dairy system. To measure and support this sustainable growth, Bord Bia introduced the Sustainable Dairy Insurance Scheme (SDAS). The Sustainable Dairy Assurance Scheme (SDAS) is a national dairy scheme with close to 100% participation from Irish dairy farmers. SDAS program was developed by a Technical Advisory Committee (TAC) representing Bord Bia – the Irish Food Board; Teagasc; the Food Safety Authority of Ireland (FSAI); the Department of Agriculture, Food and the Marine (DAFM); industry (producers and processors) and other technical experts. The SDAS scheme monitors quality assurance requirements and collects farm performance data to demonstrate the sustainability of Irish dairying at individual farm level. It monitors Ireland’s progress in a systematic way on its journey of continuous improvement.

Export Markets Growth

In 2019, Irish dairy exports reached €4.4 billion, making it the largest food and drink export category. This was the third consecutive year in which the value of dairy exports exceeded the €4bn mark. Driving this was exceptional performance in butter, cheese and dairy powders including skimmed milk powder (SMP), whey and casein - with value growth well ahead of volume in all these dairy powder categories.

While Ireland exported dairy to 124 countries in 2019, the largest destinations are The UK, The Netherlands, China, Germany and the US.


Asian destinations were the location of some extraordinary growth figures for Irish dairy exports, particularly for ingredients, albeit these are coming from a very low base. Dairy exports to priority markets like Indonesia and Malaysia increased 85% and 50% respectively to be worth more than €50m cumulatively.

Butter accounts for the greatest proportion of our dairy exports at €1.1 billion, or one quarter of the total export value. Irish butter has enjoyed unprecedented demand in recent years, particularly in the US. Kerrygold is now that country’s number two butter brand and the US is Ireland’s second largest overall market for butter. Irish butter exports also grew in Japan and in South East Asia in 2019, with markets such as Singapore, Indonesia, and the Philippines all showing increased demand.

Cheese was Ireland’s second largest dairy category in value terms in 2019 reaching €998m.


While Brexit presents a distinct concern for suppliers, 2019 was largely positive in terms of both ongoing UK market receptivity and the broader story of diversification. From a small base, cheese exports to China continued to grow and were worth €5m in 2019. The foodservice channel is driving demand, with the opportunity for mozzarella, as a key pizza ingredient.


After a number of years of relative stagnation, the value of Ireland’s Skim Milk Powder exports rose by 55% in 2019 to €331m. All EU intervention stocks of Skim Milk Powder have now been released. A successful year for Skim Milk Powder exports was reflected in increases in most key export markets and across Europe in general.

As we look over Q1 and Q2 of 2020, with outbreak of Covid-19 across many countries around the world. The impact of Covid-19 on the Irish Dairy Industry is yet to be understood fully, however the dairy market is a volatile one and the Irish industry has proved resilient when faced with other challenges in the past.

Trends

8 Key Trends in Dairy Nutrition taken from NewNutrition Business Report:

Protein
Dairy has made the most of its multiple advantages as a protein source, fueling the protein trend with innovative products but with the protein trend here to stay. Some examples including: Natural and logical source of protein in the mind of the consumer and Versatility – lots of convenient and good-tasting ways to deliver protein (on-the-go drinks, spoonable yoghurts, cheese snacks)

Digestive Wellness
One of the biggest drivers of growth in food and health, and likely to be even bigger in future as science, media attention, product development and consumer need fuel the trend.


Snackification
Snackification meets consumers’ needs for convenience and portability, and offers dairy companies the chance of better margins and risk reduction.
• This powerful, long-term trend offers many opportunities for dairy, thanks to its protein advantage, versatility as an ingredient, and familiarity for consumers.

Authenticity & provenance
A story of heritage, origin and artisanal production has big appeal for consumers, and provenance is becoming part of successful strategy for even the largest companies.
• For dairy, linking to provenance can lead to better margins, differentiation, incremental volume and open up new markets.

Permission to indulge
Giving people “permission to indulge” in your product is a smart strategy and one that’s behind many successes – it’s also a strategy that dairy is well-placed to capitalize on, since it already has a “halo of health”.
Strategies for dairy include offering products that are:
1. Natural and simple
2. Artisanal and have provenance
3. Portion-controlled
4. Offering higher benefits, such as protein or cultures

Sugar

Concerns around sugar have created a chaotic world for new product developers and marketers, as companies try to figure out how to drop sugar content without compromising on taste. 

Added to this, consumer behaviours around sugar are complex, with many claiming to want to drop sugar intake but happy to consume arti¬ficial sweeteners or “natural” sweeteners such as honey.

Plants
The growth in Plant-based “milks” and “yoghurts” is a trend the industry is watching closely. Plant-based milks have captured a lot of media and consumer attention but in reality market share is still relatively small. The nutritional benefit of dairy far exceeds many of the plant based products on the market.

Fat re-born
Consumers’ fear of fat is slowly fading in many markets, and this is benefiting dairy in particular, with sales of full-fat products rising (despite dietary guidelines that still demonise saturated fat).
Change in fat consumption is driven by several forces, including people seeking more protein, better taste and fewer carbs.

Brochure

View the Dairy from Ireland brochure, featuring an overview of the Irish Dairy Industry, Reasons to Choose Irish Dairy and a  Directory of Irish Dairy Processors and Suppliers.