The capital expenditure will fund extended production facilities, as well as investment in new product development at IDB Deutschland in Neukirchen-Vluyn.

At a function at IDB Deutschland yesterday (Wednesday) to celebrate 40 years in the German market, the company’s executives were in upbeat mood, after a record year in which Kerrygold’s market share grew to 17%, with a 50% share of the branded butter market. Minister for State Tom Hayes attended the event, as well as the entire IDB board who separately took in a fact finding visit to Holland.

Over the past 10 years sales of Irish dairy products have grown from 30,000 to 49,000 tonnes in Germany, mostly in butter. The head of IDB Deutschland Gisbert Kuegler explained that the strategy has been consistent for 40 years -”always a premium price and premium quality”.

The IDB employs 110 staff in Germany, with over 200 million packs of butter sold per annum. The business is on target this year for turnover of €280 million on sales of 49,000 tonnes. This would represent sales volume growth of 13% and turnover growth of 19%.

After launch in Germany in 1973, Kerrygold grew steadily before reaching number one position in the market in 1994, with sales of 25,000 tonnes. A major breakthrough occurred in 2009 with the successful launch of Kerrygold Extra, a spreadable product that also contains Irish butter and rapeseed oil. Crucially, it did not affect sales of Kerrygold butter.

Kerrygold Extra has now achieved a market share of 27%.

There has been a massive investment in marketing in Germany over the past 40 years to grow the brand, with €10m spent on marketing this year alone.

Germany’s 82m people are major butter buyers, with per capita consumption of 6.4 kgs compared to just 2.6 kgs here in Ireland.

Gisbert Kuegler, head of IDB Deutschland, said that there is an excellent platform for growth by converting Kerrygold from a “butter brand” to a “dairy brand”. Awareness of the brand is exceptionally high and Ireland is highly regarded as a “green, pure land”. The taste, colour and spreadability of Kerrygold butter rank very highly with German consumers.

Kerrygold is not stocked by discount retailer Aldi in Germany. “They don’t allow brands and we don’t do private label, so we can’t come together,” he explained.

He explained that “listing fees” are a significant cost of launching new products in Germany. “To achieve 10% distribution you would need €100,000 for each new product line,” he said. If the sales are slow and the product is delisted, the money is lost.

Irish cheese is also making progress in Germany - Kerrygold has a 69% market share in the small cheddar cheese market, with 22% growth this year. A new continental type cheese developed at Teagasc Moorepark in conjunction with the IDB is also being launched.

In terms of the innovation alliance with Moorepark, Kevin Lane said bluntly: “yes it is delivering, but not quickly enough”.

Interestingly, IDB Deutschland are also exploring the possibility of launching fresh Kerrygold milk on the German market. He explained that the product could be in his headquarters from Ireland in 18 hours, with a further 12 hours to reach retail shelves.

He explained that, if the business case made sense, it would be aimed at the premium €1.19/litre fresh end of the milk market. “Most milk in Germany is now 69 cent per litre extended shelf life product that lasts 35 days,” he explained.