ANIMAL HEALTH AND MILK QUALITY – A VITAL INGREDIENT

Irish Dairy Board 2015

ANIMAL HEALTH AND MILK QUALITY – A VITAL INGREDIENTDEVELOPING MARKETS AROUND THE WORLD FOR IRISH DAIRY PRODUCTS

JANUARY 2015


SETTING THE SCENE

Excellent milk quality and good animal healthare not differentiators in internationalmarkets – they are a critical requirement.

A KEY RISK TO OUR BUSINESS

• BSE, FMD – animal diseases could close our industry down over night

• Bovine Tb and brucellosis can exclude us from specific markets

• Non-regulated diseases such as Johnes disease, BVD and IBR will undermine theimage of Irish dairying around the world

A good animal health status is key to trade and open marketsbut also gives us a competitive edge.

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UNDERSTANDING TODAY’S CONSUMER

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• A new, more savvy consumer is emerging

• They want to know where their food is coming from

• They need to trust the source

• Of the emerging 19-33 old consumer group (accounting for 1/4 of the globalpopulation) almost 2/3 of them actively seek environmentally friendly andethically produced goods

• They communicate with their friends and peers through social media

• They act as brand ambassadors for the brands they like, and are quick to discreditthe brands they dislike / don’t trust


SOME CONSUMER QUERIES ON ANIMAL HEALTH


OUR CUSTOMERS MUST ENSURE PRODUCTS MEETTHESE EVOLVING CONSUMER NEEDS

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• Customers are now auditing against the highest standards in sustainability, ethicsand animal health and welfare

• They require full transparency throughout the entire supply chain

For example:

• Unilever uses software Muddy Boots which has up to550 on-farm checks

• Ahold, Walmart and Mars all use The Sustainability Consortiumwith 3 of the top 4 dairy hotspots relating to animal welfare

WE ARE OPERATING IN AN INCREASINGLYCOMPETITIVE GLOBAL MARKETPLACE

• The Irish dairy industry depends on the 85% of produce exported

• Industry stakeholders in our established markets are seeking to undermine importse.g. absence of a Red Tractor scheme governing Irish cheese imports into the UK

• Our competitors are trying to steal our grass based comparative advantageposition

• Social media is being used to interrogate our quality and animal health credentials

• Meeting quality standards is not enough – we must guard against complacency

Quality is ‘a given’.


HOW ARE WE PROMOTING OUR COMPETIVE EDGE?

We have built our business on the premiumisationof Irish dairy products.

Critical to this: a premium quality product is only possiblewith a premium quality raw material.

Irish Dairy Board 2015 9

EXPORTING TO OVER 100 COUNTRIES WORLDWIDE

GLOBAL TEAM


AFGHANISTAN

ALGERIA

ANGOLA

AUSTRALIA

AUSTRIA

BAHAMAS BAHRAIN

BARBADOS

BELGIUM

BERMUDA

BURKINA FASO

CANADA

CENTRAL AFRICAN REP.

CHAD

CHILE

CHINA

CONGO

COSTA RICA

CYPRUS

CZECH REP.

DENMARK

DOMINICAN REP.

EGYPT

EL SALVADOR

EQUATORIAL GUINEA

FRANCE

GABON

GAMBIA

GERMANY

GIBRALTAR

GREECE

GUINEA

HONG KONG

HUNGARY

INDIA

INDONESIA

IRAN

IRAQ

ISRAEL

ITALY

IVORY COAST

JAPAN

JORDAN

KENYA

KOREA REP. OF

KUWAIT

LIBERIA

MADAGASCAR

MALAWI

MALAYSIAMALDIVES

MALI

MALTA

MAURITANIA

MAURITIUS

MEXICO

MOROCCO

MOZAMBIQUE

NETHERLANDS

NIGERIA

NORWAY

PAKISTAN

PERU

PHILIPPINES

POLAND

PORTUGAL

QATAR

ROMANIARUSSIAN FEDERATION

SAUDI ARABIASENEGAL

SEYCHELLES SINGAPORE

SLOVAKIA

SOUTH AFRICA

SPAIN

SRI LANKA

SWEDEN

SWITZERLAND

TAIWAN

TANZANIA

THAILAND

TOGO

TRINIDAD & TOBAGO

TUNISIA TURKEY

USA

UAE

UK

VENEZUELA VIETNAM

ZAMBIA

ZIMBABWE

WE ARE A GLOBAL BUSINESS


BRAND & VALUE ADDED INGREDIENTS BUSINESS


BringingBringing

USA• Kerrygold is No.1 imported butter

• Dubliner Cheese is No. 1 Cheddar

• Projected Growth: $112m in 2014, $250m by 2018

MARKETING IRISH DAIRY PRODUCTSPremiumisation of Irish dairy is key.

Bringing the consumer closer to the farmer.

Focus on Irish dairy farming’s grass fed message– pure, quality, taste.


KERRYGOLD US 2015 CAMPAIGN

• ‘Delicious Because Nature Said So’ Campaign shot on the Cleary Farm inBunmahon, Co. Waterford

• Focused on Irish dairy farming’s grass fed message – pure, quality, taste

• Targeting US consumer who is interested where their food comes from

KERRYGOLD GERMAN 2015 CAMPAIGN

• No. 1 Butter – 55% market share

• Milk/cream from 3,400 farms required to supply Kerrygold butter for theGerman market each year

• Campaign highlights Irish farming’s respect for animals, nature and tradition

• Targeting German consumer who is interested in origin and quality of food

CHINA• Recent launch of Kerrygold UHT milk

• Chinese liquid milk market estimatedto be worth $18bn with annualgrowth of 10%

• Premium segment accounts for 28%of milk volume and 45% of value

14Kerrygold brand retails at over €660 million annually

AFRICA

• Kerrygold is No. 1 imported butter in SouthAfrica

• Top 3 brand position in WMP: Malawi, Angola,DRC and Congo

• Team of over 250 own/shared staff in-market

• 2014 Sales of €100m

MARKETING IRISH DAIRY PRODUCTSPremiumisation of Irish dairy is key.

PROTECTING OUR COMPETITIVE EDGE

• Promotion and maintenance of a point of differentiation for Irish dairy products– Grass based production– Focusing on milk quality– Animal health and welfare– Sustainability

• SDAS now enables us prove our sustainability credentials and meet the needs ourcustomers who require a robust and sustainable supply chain

• Ongoing work with industry bodies to create and maintain this positioning

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IRISH DAIRY FARMERS ARE FUNDAMENTAL TO THESUCCESS OF THIS POSITIONING


LOOKING FORWARD

• A lot has been achieved – lower SCC’s, reduction in prevalence of bovine Tb anderadication of brucellosis

• Great work by AHI – including in management of BVD, and Johne’s disease, and onCellCheck programme

• But can’t be complacent - we are only as strong as our weakest link - all farmersand co-ops need to operate to the same standards

• Complacency is too big a risk for an export orientated sector like dairy

AS AN INDUSTRY WE MUST STRIVE TO CONTINUOUSLYIMPROVE OUR ANIMAL HEALTH STATUS AND MILK QUALITY TO

CLAIM OUR MARKET LEADERSHIP POSITION

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ANIMAL HEALTH AND MILK QUALITY – A VITAL INGREDIENT