News that Tirlán is to supply the butter going into the Kirkland Signature private-label brand in the mega US supermarket chain Costco has been met with sharp disapproval by both the Irish Farmers Association (IFA) and the Irish Creamery Milk Suppliers Association (ICMSA).
The fear is that increased competition in the butter aisles, specifically within the Irish grass-fed butter category, is going to damage sales of higher-cost Kerrygold butter.
In 2025, the Ornua value payment was worth €74.3m – this is the additional value generated by Ornua from the sales of its branded products.
According to Ornua, if this payment is spread across the liquid milk equivalent of dairy products purchased by Ornua, it works out at 2c/l.
Ornua handles about 50% of the dairy produced in Ireland, so it could be said that the Ornua value payment is worth 1c/l across every litre produced in Ireland.
The fear being expressed by the farm organisations is that if Kerrygold sales drop, then the value payment will be reduced.
From a Tirlán perspective, if the value payment reduces, it stands to lose from that.
However, if its sales of butter increase due to the Costco deal, then it could increase its margin from that butter relative to other market opportunities.
Costco
So what is Costco? Costco is a global wholesale supermarket chain with its base in the US, known for its cheap prices and bulk purchases.
It operates on a membership model, so consumers need to be members of Costco to get the discounts.
The stores are massive and have a warehouse-style feel to them, with pallets of the same product as opposed to shelves containing products.
The dairy aisle is a case in point. Pallets of butter, cheese and milk are stored in a chilled part of the store where shoppers can walk into the chilled area and load up their trolleys.
The sides of the chilled zone face on to the rest of the shop and are separated by glass doors, so consumers can pick up the products they want from the other side too.
The Irish Farmers Journal visited the store as part of a study trip to the US in May 2024 and we were accompanied on the store tour by Ornua employees.
Butter
There were multiple different lines of butter for sale at Costco, the cheapest of which was the American butter.
This is generally the same across all US grocery stores, including high-end stores such as Trader Joe’s and Whole Foods.
Imported grass-fed butter is a premium product and there are two types of grass-fed butter for sale in Costco during the visit in 2024.
These were Kirkland Signature Grass Fed butter, which at the time was supplied from New Zealand origin butter, and there was Kerrygold.
Price-wise, the Kirkland butter was selling for 53% cheaper than Kerrygold on a price-per-pound basis.
What is Kirkland Signature?
Kirkland Signature is the own brand for Costco, in the same way that Aldi and Lidl have their own brand range of products in Irish stores.
Kirkland covers a huge range of products within Costco from toilet paper to red wine and everything in between.
Given the scale of the Costco business, Kirkland is a huge brand, with retail sales last year of $90bn.
To put that in context, retail sales of Kirkland Signature products are seven times more than Kellogg’s in the States and nine times more than Campbell Soups.
Last year, retail sales of Kerrygold butter in the US broke the €1bn mark for the first time, which is a massive achievement for Ornua.
The question is, will that ever happen again given that the Kerrygold brand in Costco under threat from Irish butter at huge scale?
What about Truly Grass Fed?
Tirlán first started competing with Ornua in 2019 with the launch of the Truly Grass Fed butter in the US.
The difference between now and then is that Truly Grass Fed was a new brand, which was starting from scratch, whereas Kirkland is a well-established brand with a huge customer base.
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