Ireland

1 Glanbia’s brave new world

The approval in November of the new joint venture, Glanbia Ingredients Ireland (GII), by members of Glanbia Co-op and shareholders in Glanbia plc, marked the major development in the Irish dairy sector during the year.

The new GII is majority owned by Glanbia Co-op (60%) with the balance retained by Glanbia plc (40%).

Crucial to the joint venture will be the building of a new dairy processing plant at Belview, Co Kilkenny, which is expected to be operational by early 2015.

The new plant will be two thirds the size of Ballyragget, will cost €150m and will process an additional 800m litres of milk annually.

Glanbia Co-op also approved reducing its stake in the plc to below 51% which involved a further sale of 3% of Glanbia plc share capital and a spin-out of a further 7% share capital to individual co-op shareholders.

2 Kerry’s huge jobs announcement

The decision by the Kerry Group in October to invest €100m in a new industry-leading global technology and innovation centre in Naas was a major national announcement in terms of jobs.

The new facility, which will be located on 28 acres at the Millennium Business Park, will create 900 new jobs, most of which will come on stream by 2015.

3 The dawning of the age of McDonald’s

Dawn Meats announced its breakthrough partnership with the global fast food giant McDonald’s in May when it clinched a €300m contract to process 18,000t of Irish beef annually for the restaurant chain. Dawn Meats opened its new €14.5m 40,000 square foot plant the following month, which will produce three million Irish beef hamburgers per day.

The significance of the deal is that it sees an Irish beef processor engage in vertical integration with a major multinational company.

4 Onwards and upwards at Watergrasshill

The Kepak group also made its mark on the agri jobs front in November when it announced the creation of 100 new jobs at its Watergrasshill plant in Co Cork.

Kepak has invested over €40m in Watergrasshill in recent years and today employs nearly 600 there.

Kepak has a major commercial link-up with the Cork-based Musgrave group and supplies beef, pork and lamb to the 195 SuperValu and 459 Centra stores across Ireland from its Watergrasshill base.

5 An offal lot of exports to China

Carton Brothers, the poultry processing group which owns Manor Farm Chickens, announced the creation of 48 new jobs also in November.

The jobs, at its processing plant in Shercock, Co Cavan, are expected to be in place early this year.

This jobs announcement followed a €3.3m investment in new specialised equipment to remove offal – heart, liver and gizzard – from its chickens.

Most of this segmented offal will be exported to Asia – China in particular – where chicken offal is a popular food.

Carton Bros has an estimated annual turnover close on €200m and employs almost 700 staff to process an estimated 75% of the 70 million birds processed annually in Ireland.

6 Connacht Gold takes Donegal

The sale of Donegal’s milk and stores business to Connacht Gold Co-op for €13.5m last year, with a potential further €7.4m to be paid as part of an earn-out agreement, was approved by the Competition Authority.

The deal saw Donegal Creameries’ 130m litres milk pool, the liquid milk processing facility at Kilygordon and 11 retail stores – nine in Donegal and two in Northern Ireland – being acquired by Connacht Gold.

The business had a turnover of €69m for 2010 and underlined Connacht Gold’s continued focus on expanding its consumer foods business.

It also copperfastened Connacht Gold’s position as the second largest liquid milk processor in Ireland, behind Glanbia.

7 Poultry Difficulties

The poultry industry was hit by examinerships and receiverships during the year with Cappoquin Poultry in Waterford hitting the headlines in August and Cootehill Poultry in Cavan suffering the same fate in September.

The High Court appointed Michael McAteer of Grant Thornton as an interim examiner at Cappoquin Poultry Ltd (CPL) following a petition brought by Kinsale-based feed company Henry Good Ltd.

The company supplied CPL’s growers with feed on behalf of CPL for a number of years.

Subsequently, in November, the High Court ended the interim receivership and approved the takeover of Cappoquin Poultry by the Producers Co-operative Society and a business consortium involving Dr Sean Brady and Raymond O’Hanlon.

In Cavan, Cootehill Poultry, (Co-operative Poultry Products Ltd) went into receivership with the immediate closure of the plant and the loss of 90 jobs.

The company had been encountering increasing trading and liquidity issues. With declining profit margins, rising feed prices, competition from cheaper imports and retailers’ determination to sustain their profit margins, the business became unviable.

International

8 Nestle raises the ante in Askeaton

What made April’s acquisition by Nestlé of Pfizer’s infant formula business for $11.85bn (€9bn) news here was the fact that the deal included Pfizer’s infant formula plant in Askeaton, Co Limerick.

The Limerick plant was set up in 1974 to produce over 48,000 tonnes of powder infant formula annually – a process which consumed over a fifth of Ireland’s total lactose production, some 8% of the country’s skim milk powder and portions of our national production of whey protein concentrate.

All of the key dairy processors like Glanbia, Lakeland, Kerry and Dairygold, currently supply product to Askeaton each year.

9 British milk churned by continentals

The German-owned Muller British dairy subsidiary acquired Robert Wiseman Dairies (Wisemans) during 2012 – the largest liquid milk processor in Britain with 30% of the overall market.

Shortly afterwards the Danish headquartered co-op Arla agreed to merge with British co-op Milk Link and also German Co-op Milch-Union Hocheifel (MUH) to create what some have referred to as the ‘Fonterra of Europe’.

Arla, fresh on the heels of mergers/acquisitions last year (Hansa-Milch, Allgauland-Kaserein in Germany – Milko in Sweden and the construction of a one billion litre new dairy in Aylesbury, England) increased its milk pool by a further 2.8 billion litres (almost half of Ireland’s current milk pool) with these mergers.

Both continental groups now control over 55% of the British milk market.

10 Dutch retreat from Britain

Dutch meat group Vion announced its decision to leave the British market in November because of the ‘extremely challenging’ trading conditions there. This immediately focused attention on the future of its pig processing facility in Cookstown, Northern Ireland, and the McGees butchers chain in the Republic.

In the event, Vion’s pig processing division was sold to local management whose buy out proposals were backed by an international equity group.

The other British divisions, which include poultry and red meat operations, are on the market and Vion remain hopeful of concluding deals for both.