Chinese buyers eye Ireland as dairy source

A major Chinese buyer of dairy powders has told the Irish Farmers Journal that his group is considering Ireland as a source of ingredients as part of his company’s strategy to reduce dependence on New Zealand.

Jian Lu, deputy general manager of the dairy and beverage division with Want Want group, was in Ireland for a weeklong tour as part of Bord Bia Marketplace International.

With headquarters in Shanghai, Hong Kong-listed Want Want is a major player, with annual sales of €3.7bn, 5,000 employees and more than 100 factories in China. As well as snacks and beverages, it has a major dairy division focused on flavoured milk for children and sweet condensed dairy drinks.

Want Want purchases 100,000 tonnes of whole milk powder per year.

“We buy 70% from New Zealand and also source from domestic producers in China,” Jian Lu said.

“We hope that we can find an Irish source – our company strategy is to diversify the percentage sourced from Fonterra.”

He said he was aware of France, Germany and the Netherlands as potential sources of ingredients, but Ireland has only recently come to his attention.

“Last November the Bord Bia dairy team visited our headquarters – that was the first time that I heard about Ireland.”

He has been impressed to date. “There is a perfect match between Ireland and China. We want to find a company to form a long-term relationship – maybe whole milk powder first and then cooperate together to develop new products. The most important is to find a trusted partner – we would not say no to setting up a production plant together. We are looking for a win-win relationship for both sides.”

He said that Want Want currently collaborates with Kerry Group in China.

Mr Lu was impressed by the statistic that more than 10% of global infant formula is sourced in Ireland. Likewise, he expressed satisfaction with the companies that he visited as part of the trade mission – Carbery, Dairygold, Glanbia, Kerry and Lakeland.

The fact that the Irish companies were all participants in a central Government programme – Origin Green – impressed the Chinese visitor.

Mr Lu believes that China’s dairy imports will continue to expand.

“The growth in demand is exceeding the growth in supply. We have a limited supply of land, so imports of dairy will have to grow,” he said.

The executive was one of 23 Chinese dairy industry personnel who travelled to Ireland for a weeklong visit organised by Bord Bia through the China Dairy Association.

As well as site and farm visits, the group met with scientists from University College Dublin, Food for Health Ireland and Teagasc Moorepark.

James O’Donnell, Bord Bia representative in China, said that the Irish industry took the opportunity to highlight its scientific credentials.

“We don’t want to compete just on price,” he said.

“Our message is that by sourcing dairy ingredients from Ireland, Chinese companies can gain access to science and research.”

O’Donnell said that the recent change to the one-child policy is not expected to make a major difference to Chinese dairy demand.

The continued trend towards urbanisation will be the main driver of growth, he said.