Where do you see future opportunities for adding value in dairy?

The greatest opportunities for dairy co-ops lie in more effective valorisation (value adding) of dairy proteins, both through the production of higher concentrated whey proteins as well as the manufacturing of fat-filled milk powders. Increasingly tailoring products to end users is not only becoming more important, but is an effective way to add value. This could be the tailoring of cheese products for end users in Chinese food service, for example. The establishment of satellite venture capital arms to invest in high-growth companies could also yield dividends.

How much impact will Brexit have on traditional trade flows for dairy?

There is likely to be some impact, irrespective of the deal reached. Uncertainty will, however, be the name of the game.

What are the latest innovations or new product developments in dairy that you see from companies?

Right now there is an ever-increasing fractionation of whey powders into more specialised ingredients, in particular achieving higher-quality ingredients. Reducing the amount of ingredients in products as well as moving ingredients to more natural origins. Products that have a story behind them are also growing rapidly. For example, Icelandic style Skyr yogurt is something that has grown in popularity in the EU. Much of this growth is driven by branding and marketing, with health components a key marketing feature. Fairlife liquid milk in the US is another example of this, moving the product away from being an ingredient to a beverage.

How does Ireland rank in terms of product innovation development?

In technical ingredients, Ireland is one of the global leaders. However, a notable difficulty for Ireland’s dairy industry is the seasonal variation in milk supply, not to mention the inherent importance of commodities in the overall dairy product mix.

Where do you see the growth in demand for dairy coming from?

Growth in dairy demand will be led by China. China will be the epicentre for global dairy in the coming years, accounting for 23% of global dairy consumption outside of India in the coming five years. Demand for fresh dairy products in Asia is expanding rapidly, while in global markets, cheese demand is expected to be robust. Solid dairy fat demand has surged recently, and will remain vigorous.

What products or categories should Irish dairy companies be targeting to take advantage of that growth?

Focusing on value-added technical ingredients will be key for Ireland’s dairy industry. Producing consumer retail products and leveraging the pasture-based GMO-free model of production could also be another interesting growth driver for dairy co-ops in Ireland. Expanding organic production is another possibility.

Is European milk supply the key driver of dairy market sentiment?

Europe certainly has an important impact on market sentiment but milk production in New Zealand as a major global exporter also has a significant impact on global prices. On the demand side, China has the most significant impact on global dairy prices.

James Caffyn will be speaking at Dairy Day 2018 in Punchestown on Tuesday 20 November.