Jack Kennedy sat down with Dairygold chair John O’Gorman to discuss the news last week that Dairygold is going to sell Dairygold cheddar in the US, in a partnership with TINE, the Norwegian company.
JK: Is Ornua not doing a good enough job on cheese in the US for Dairygold?
John O’Gorman: My role as chair is to maximise the return to shareholders; we got offered an opportunity with TINE and we took it. Someone else was going to take it if we didn’t – should we have walked away from the opportunity?
Will it turn into a battle on price on the shelves?
No, not at all, this is not going in at a lower price compared to Ornua-branded cheese in the US market. We would be better off going with 1,000t at a margin than going in with volume and lower margin at a price that is unsustainable.
Have you fallen out with Ornua?
No, not at all. We do 30% of our business with Ornua about 25,000t of cheese per year with Ornua and we are looking for a long time for an opportunity and it wasn’t materialising.
Did you try discuss any options with Ornua?
We do another Regato-type cheese with Ornua and volumes through that product have been falling year after year.
Without looking carefully at the numbers, I estimate we are back 40% on volumes traded and the rest of the cheese we do with Ornua is just at commodity cheese price.
What tonnage are you aiming for in the US?
Small tonnage to start off – we are not going into competition on volume. Margin is what we are after.
Is that too easy to say? In practice you will have two or three brands face to face on the shelf – inevitably price comes into play.
No, we are not going competing with the Kerrygold brand and this shouldn’t be looked at through that lens. This product will be sold in different stores and different parts of the US.
Surely Ornua could have been your partners if you wanted to try a higher-premium cheddar in the US market?
I’ll say it again, we were looking for an opportunity in branded cheddar for a long time and it just wasn’t happening. Let me repeat we are not going competing on price – check out how much the US cheese is retailing in the US at the moment.
Do you see any negatives for Ireland – in that Irish farmers have helped build and invest in the Kerrygold brand?
No, I don’t see any negatives. Yes we are competing on product but not on brand.
Is Pastureland-branded cheese any different?
No, it’s standard high-quality, grass-fed, cheddar cheese. TINE has a distribution network over there with Jarlsberg cheese and we have a long-established relationship with TINE/Norseland through our Mogeely partnership. What are we supposed to do when an opportunity comes and our sales team check it out and it works for us? We have to find a home for 50,000t of cheese and we need to maximise the value of it.
Is there a piece in this about exporting the premium Ireland owns in grass-fed cheddar cheese to a Norwegian company?
Look, TINE are not a charity, no more than Ornua. They are not going to work for nothing.
I’ll ask again, did you talk to Ornua in advance of coming out with this opportunity?
Look we are always doing business with Ornua and it’s working well, but individual business opportunities are not discussed. I certainly didn’t, and like I said we have been looking for a long time for a branded cheddar option.
So does that really say the new structure of the Ornua board is not working?
Look, any change will take time to bed in – obviously owner members are further away from the decision-making table, which is disappointing. Yes, we have an independent nominee on the inner board, but that person is not there to look after Dairygold’s interests. I’m disappointed that farmers didn’t get an alternative option on Ornua re-structure and payout. What we are left with is a co-op with a plc governance structure.
You are not for turning on this?
Like I said, we aim to maximise returns possible from the market for our members. That’s our objective and if Ornua can’t do it we have to go a different route. TINE knocked on our door, our sales team did the due diligence, and we are going to try and make this work.
John O’Gorman is farming at Clogheen, Co Tipperary, and has been Dairygold chair since 2018. John served as vice-chair since 2017 and replaced James Lynch from Clare who served as chair for three years. John was first elected from the Tipperary region in January 2013 and holds a bachelor’s degree in accounting and business management.