Inside Kerrygold’s German success story

Many companies measure their success by figures such as profit, turnover or efficiency. However, at Ornua Deutschland in Neukirchen-Vluyn, success is measured by having a street named after the brand. Ornua Deutschland deals only in Kerrygold branded products, it has a turnover of €365m per year and employs 150 people.

Butter arrives from Ireland in 25kg blocks. It is unpacked and reworked to create products to suit the German market. There are five packing lines for fresh butter, four for tubbed butter and one for 10g/15g frozen butter shapes that can vary from golf balls to flowers.

The factory works on a three-shift system, five days a week, and is washed down every Saturday. There are 13 employees per shift in the production area, two on the shop floor, and two to four dealing with logistics. In a single shift, 70t of fresh butter is produced as well as 30t of tubbed butter (Kerrygold extra) and 5t of frozen butter.

Take a tour of the factory in our video below:

From its initial launch in Germany over 40 years ago, Kerrygold is now selling so many butter packs here each year that if they were lined up, their length would be 18 times the distance from Dublin to Berlin. The cream from 3,400 Irish dairy farms supports the German Kerrygold market.

Up to 50,000t of butter per year

In 2015, a total of 47,499t of butter have been produced at Ornua Deutschland so far due to strong growth in the spreadable market. Kerrygold has been the biggest brand in the German butter market, with a 14.2% share, but it is currently being challenged by Denmark’s Arla in terms of volumes sold. However, while 30% of German people who buy Arla butter buy it regularly, 60% of those who purchase Kerrygold do so regularly.

Some 96% of German consumers are aware of the brand and it is stocked in 84% of supermarkets – but it is not in Aldi. Kerrygold will penetrate 10.7 million German households and the brand will grow by 14.4% in the country this year.

The EU average per capita consumption of butter is 4.2kg/year. In Ireland it is 2.6kg/year, while in Germany it is 6.4kg/year.

Marketing

€12m is spent on marketing Kerrygold in Germany every year, 95% of which is TV advertising. However, according to research conducted by Ornua Deutschland, unaided brand awareness is 52%.

In the supermarkets that the Macra group visited, Kerrygold butter was nearly always on the bottom shelf. However, according to Ornua’s Key Account Manager in Germany, Holger Spee-Girbig, this is due to the high volume of sales.

“The logic is that you have the most space at the bottom and the Kerrygold products are the most sold butter in Germany,” said Spee-Girbig.

Listen to an interview with him in our podcast below:

The cheapest butter on German shelves costs 89c/250g pack. The price for the equivalent pack of Kerrygold butter is €1.79/pack. Spee-Girbig says consumers are willing to pay this premium because they associate the brand with higher quality.

“The future is GM-free”

The managing director of Ornua Deutschland, Gisbert Kuegler, told the Macra group that the next step for the Kerrygold brand is to convert it from being associated with butter to encompass all Irish dairy products. It is already used to sell cheese: 65% of the cheddar cheese sold on the German market is Kerrygold.

“In the past we focused on the emerald isle and the wonderful people there,” said Kuegler. “However, now we need to create a grass-based, carbon-efficient and welfare-friendly image for Ireland.”

Other companies market their butter on the grounds that it is made from meadow milk using a star on its packaging. However, in order to achieve this star the cows merely need to be kept outside for six hours a day, 120 days per year.

“It is very important that Irish farmers keep their cows out on grass,” said Kuegler. “If Ireland wants to give it that last kick of success and be the outstanding market leader in the longer term, then you need to declare yourselves GMO free and wipe out all GMO-manipulated feed.”