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This week, the Irish Farmers Journal revealed that global drinks giant Coca Cola is considering establishing a dairy processing plant in Cork.
Senior executives in Coca-Cola have held a number of meetings in Ireland in recent months to learn about the Irish dairy industry.
Coca Cola has even visited the Teagasc dairy research facility at Moorepark in Fermoy, Co Cork, and also visited the Dairy Processing Technology Centre (DPTC) at the University of Limerick to get a better understanding of the R&D work ongoing in the Irish dairy sector.
Unusual
On the face of it, this may seem an unusual move from one of the most iconic brands in the world. Why would Coke come to Ireland to set up a dairy plant?
However, the move would not be without precedent as Coca Cola has been in the milk business for quite some time. In 2014, Coca-Cola partnered with Select Milk Producers, a 100-strong group of US dairy farmers, to create a new brand of milk for the US market called Fairlife.
The company sources milk for the product direct from farmers in the Select Milk Producers group, including from the 30,000 cow Fair Oaks dairy farm in Indiana.
Select Milk Producers is the same group of dairy farmers that Glanbia is partnering with in the US to build a new cheese plant in Michigan that will process around 1.3bn litres every year into 135,000t of cheese.
Healthy
The Fairlife product costs twice the price of regular liquid milk and is marketed as a healthy drink containing 50% more protein and 30% less sugar than standard milk. Since its launch, Fairlife has been extremely successful in the US market. According to Coca Cola, over 40% of Fairlife sales are to consumers who had previously stopped drinking milk but had now returned to dairy.
The success of Fairlife in the US market has encouraged Coca Cola to expand the brand further. In December, the company announced plans to build a €56m dairy plant in Ontario, Canada, to bring the Fairlife to the Canadian market for the first time.
Coca Cola says this new dairy facility will be finished by 2020 and will source milk direct from Canadian dairy farmers.
When contacted by the Irish Farmers Journal, Coca Cola downplayed the suggestion it will build a dairy plant in Ireland as "speculative", but didn’t rule out the possibility it will happen.
“As a long-standing and significant investor in Ireland, Coca-Cola has regular discussions with state agencies and partners to discuss different areas of our business including our ongoing evolution to become a total beverage company,” the company said.
If the company was to build a dairy processing plant in Ireland, it is highly likely it will need a supply of local milk and at significant volumes too.
Any Irish dairy facility built by Coke will not only be for Irish customers but to service Coca Cola’s customers throughout Europe.
Coffee
The other potential reason behind Coca Cola exploring options to build a dairy processing site could be related to coffee. In August last year, Coca Cola paid €4.5bn to acquire the Costa coffee chain, which is the largest in the UK.
Coke may be exploring new products such as ready-to-drink coffee for busy, on-the-go consumers
Coffee is one of the world’s fastest-growing drinks categories and Coca Cola is looking to take its share of this growth by buying into Costa. Coffee drinks are also one of the largest users of milk and dairy, with US coffee giant Starbucks using more than 600m litres of milk every year.
Now that it has moved into the coffee space, Coke may be exploring new products such as ready-to-drink coffee for busy, on-the-go consumers.
Such a product would require new technology to manufacture and may be the reason why Coca Cola executives were so keen to visit Moorepark and the DPTC at University Limerick to learn about Ireland’s R&D capabilities in dairy.
Whatever Coca Cola executives are planning for Ireland, time will tell. The company will make its own decision on any dairy plant in Ireland. However, if Coca Cola were to go ahead with a dairy plant here, it would be a major vote of confidence in the Irish dairy processing sector and a positive for Irish dairy farmers.
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