It’s a pleasant Thursday night in Kuala Lumpur, the capital of Malaysia, and the city’s street food district is alive with people – tourists and locals alike. Suddenly, and without any warning, the heavens open and rain begins to torrent in sheets from the sky. Rain, but not like we know it in Ireland such is the ferocity and volume at which it falls.

Streets begin to flash flood and people scramble for shelter. Sheet lightening intermittently lights up the sky above the city, followed sporadically by the odd crack of deafening thunder. In the tropics of Southeast Asia, this kind of extreme weather is never far away.

Whether we like it or not, these are the conditions to which Ireland’s dairy industry must now adapt as we increasingly find ourselves playing in these new and exotic markets.

Increasing production

Traditional markets in Europe and North America are almost tapped out and well supplied.

As Ireland’s dairy farmers move ever closer to producing 10bn litres of milk per annum, more and more of our dairy co-ops must look east to countries such as Malaysia and neighbouring Indonesia to find a home for all the extra dairy Ireland is now producing.

However, Ireland has significant work to do to start making inroads in these new markets. The most striking aspect of the recent Bord Bia-led trade mission to Indonesia and Malaysia earlier this month was how little known Ireland is as a country by locals in both markets.

Guinness is one of the most popular drinks in Indonesia, yet few had any idea it was an Irish brand, with most believing it to be from Thailand. Speaking with executives from local dairy companies in Indonesia who are completely reliant on imports of SMP and whey as a raw material for their business, there was little or no knowledge that Ireland was a major dairy exporter.

As one executive put it, Ireland is in the same position as the US dairy industry was 20 years ago in terms of its recognition in Southeast Asia. In the 1990s, the US was not known to local dairy companies in Indonesia as a dairy supplier. At the time, Indonesia’s dairy import needs were almost totally met by New Zealand.

The US Dairy Export Council (USDEC) set about growing awareness of US dairy in Indonesia and today US companies have eked out a 15% share of the market. Ireland must now do the same to build its name with domestic dairy companies in these markets as a go-to source of dairy products.

Notwithstanding the challenge, huge opportunities do exist in these markets. In Indonesia for example, the local cuisine is either extremely spicy or extremely sweet and loaded with sugar. The country is now facing a diabetes epidemic because of the fondness for sugar among the population.

Diabetes epidemic

In a bid to tackle this, the Indonesian government is aiming to promote dairy among Indonesian consumers as a high-protein, healthier alternative to traditional sugary drinks and foods. While dairy consumption in Indonesia is the lowest in all of Asia at just 13 litres per person per annum, even a slight increase in dairy consumption among the 265m population will require a lot of extra dairy to be imported.

Right now, most dairy in Indonesia is consumed as either liquid milk or yoghurt, with products such as cheese, butter and cream sold in upmarket supermarket stores around Jakarta and other urban centres. Interestingly, foods we see every day in the west such as pizza are almost non-existent in Indonesia.

However, as Indonesia’s middle classes continue to expand, consumers will increasingly shop in formal supermarket chains and find themselves exposed more and more to western style dairy products. Until then, Irish dairy exporters will have to be satisfied eking out a share of a market that mostly requires basic products such as SMP and whey powder.

In Malaysia, society is already significantly westernised with chains such as McDonald’s, Burger King and Starbucks on almost every street around Kuala Lumpur. Consumer spending power is also stronger in Malaysia where the opportunities for Irish dairy exports may lie in higher value infant formula ingredients.

Advantage

To take advantage of these opportunities, Bord Bia has plenty of work ahead of it in building Ireland’s reputation as a source of high quality food and drink among the food importers in both countries. Just like the US dairy industry 20 years ago, it will take time and investment for Ireland to achieve this and build its name in Southeast Asia.

What’s certain in a post-quota Europe, is these are the new markets that Ireland must develop in order to find a home for all the extra dairy the country is now producing. It will be interesting to monitor the progress our exporters make in these markets over the coming years.