The land of rising demand - Asian markets could be the biggest customers for Irish dairy exports by 2040

ornua foods

Ornua is predicting big opportunities for Irish companies in Asia

Irish companies are looking eastwards to Asia for new opportunities in dairy and health food markets.

A potential reduction in tariffs for produce under the new EU-Japan economic partnership expected to come into force in the next two years saw big players from the food industry travel to Japan and South Korea as part of the recent trade mission led by Agriculture Minister Michael Creed and Bord Bia.

"My personal belief is that in 20 years Asia will be the largest market for Irish dairy export," said Sean Ryan, Ornua's Asia manager, who is based in Shanghai.

"That takes time, it is not going to happen overnight."

Many of the Asian countries have a milk deficit and Irish companies are selling butter, cheddar and ingredients such as whey for 'functional foods' targeted at older consumers.

Ornua has expanded its footprint rapidly in the region over the last two years and now has Kerrygold butter and cheddar on the shelves in China, Singapore and Malaysia.

pictured at the launch of kerrygold in south korea l r vincent tong ornua minister michael creed sean ryan ornua tara mccarthy bord bia

Last week it launched Kerrygold butter in an eye-catching silver box in the Korean marketplace.

From a standing start, it hopes to sell 30-40 tonnes next year into the country which has a population of 51 million despite being only 20pc bigger in land mass than Ireland.

Ornua is also aiming to sell cheese into Korea and from next year into Vietnam and, in the future, Indonesia and other Asian markets.

Exports of dairy produce to Korea in 2016 were €3.3m, or some 1,300 tonnes. Trading volumes in 2017 have increased to €3.4m by the end of August and it represents a key market for Irish cheddar cheese, milk powders, and casein products.

Mr Creed said dairy was a "good fit" for the region, with some of the Japanese companies he met active globally in trying to source dairy ingredients.

Conor Mulvihill from Dairy Industry Ireland says the reduction in tariffs during the new 16-year trade agreement between the EU and Japan will provide potential opportunities for sales of cheddar into Japan.

Irish dairy exports to Japan are worth €54m, including around 4,500 tons of cheddar and cheddar-type cheese destined for food service or retail.

"More and more it has surprised me the amount of cheddar that is in Japan. The big challenge that we have from a dairy perspective is that no one else in Europe has the palate for cheddar and if we are locked out post-Brexit of the 94,000t UK cheddar market which is the equivalent of 1.25 million litres of milk from Irish farmers, where does that go?" he asked.

The logical answer is to look to other places in the world where they consume cheddar in large quantities. "Japan definitely is one, it surprised me," said Mr Mulvihill.

However, he said the way that cheddar is consumed in Japan differs from European markets, and investment is needed to correctly target the marketplace and establish relationships.

Mr Mulvihill said the competitors in the marketplace such as Fonterra and Dairy Australia have learned that it is all about "trust, stability and supply".

"They'll want it powdered, they'll want it adjusted for food service, they'll want it in sauces. We have to learn what they want, make those relationships and get in with the traders and retailers. It is a highly sophisticated market."

Many Irish firms are already selling ingredients such as whey into the Asian marketplace.

"Ireland is majoring in that," said Mr Mulvihill. "When you are walking around Japan streets you can see 'food is health' and 'food is life' messages on shopfront signs. There is definitely a niche there.

"There is a need for a co-ordinated effort between the Agriculture Department, Bord Bia, Enterprise Ireland and the companies to establish a hub in Japan to try and tap into the marketplace.

"It is encouraging but we are going to have to invest," he said.

"The Australians have two equivalents of my organisation here full-time in Japan working on regulatory and trade issues and that's not even counting the companies that are there -Fonterra have a full-time office. That is what we are competing against and if we want to play senior hurling that is what we are going to need."

David Deeley from Bord Bia's market research team explains with a growing elderly population in Japan there is a strong focus on functional health foods and they are "highly conscious of a good diet".

Sugata, Bord Bia's research team on the ground in Japan, pointed dairy was now "huge" in Japan, with changing palates seeing people opting for stronger tasting cheeses to go with a glass of wine.

Noel Corcoran from Cork's Carbery Group, one of the big five cheddar cheese producers, said it is targeting the market for whey protein-based ingredients for drinks or functional uses in food such as muscle wastage in the elderly.

"In Japan it takes a long time to build up relationships and you are dealing with companies for a long-time and they like to see the same people," he said.

Source: Louise Hogan, FarmIreland.ie

TOP