Ornua, owner of the €1 billion Kerrygold brand, is facing what insiders describe as a fifth-column attack in the United States.
Tírlan, one of Ornua’s largest suppliers, has separately signed a deal with US retailer Costco to sell butter under Costco’s private label Kirkland, placing it in direct competition with Kerrygold.
Tírlan’s butter will also be priced at about $6 (€5) a kilogram, undercutting Kerrygold’s equivalent.
News of the deal has caused a ruckus in agri circles here, with farmers’ groups warning it could trigger a pricing war.
Irish Creamery Milk Suppliers’ Association president John Drennan said Irish dairy farmers’ “first reaction would be astonishment that two Irish co-operatives appear to be following different – and potentially conflicting – strategies in international markets that could undermine farmer milk price in the short and long term”.
Irish dairy is a complex tapestry of businesses, with Ornua, formerly the Irish Dairy Board, sitting at the top. Its primary function is to market and sell Irish dairy produce abroad on behalf of leading co-ops here, the largest being Tírlan.
It has proved one of the great success stories of Irish industry, with Kerrygold becoming the first Irish food brand to eclipse €1 billion in annual sales, of which Tírlan is the biggest beneficiary.
Tírlan evolved from Glanbia Co-op and now controls the dairy business formerly owned by Glanbia plc.
What size does your pension actually need to be for a comfortable retirement?
It’s not the first time it has clashed with Ornua. It launched its own dairy brand, Truly Grass Fed, in the US in 2018 just when Ornua and Kerrygold were embroiled in a court case about their own grass-fed credentials.
Ornua reported a 5 per cent jump in operating profits for last year despite what it described as “highly challenging” trading conditions in the US with “tariff uncertainty” and food price inflation anchoring the market there.
Ornua chief executive Conor Galvin has warned that Donald Trump’s tariffs could cost the group up to €50 million a year.
The last thing it needs is a price war with one of its own suppliers in a key market.